29800 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

1The United States plans to publish the

comments and this response promptly in the

Federal Register. It will provide the Court with a

Certificate Of Compliance With The Requirements

Of The Antitrust Procedures And Penalties Act and

file a Motion For Entry Of Final Judgment once

publication is made.

2The United States on January 19, 1996,

numbered, indexed, and lodged with the Court all

143 comments it had received as of that date. For

ease and convenience, the government in this

Response refers to individual comments by those

assigned numbers. The attached supplemental log

lists the numbers assigned to the additional 12

comments the United States received from January

19 to March 27, 1996.

3Comments 1, 7–8, 11, 15–16, 25, and 142–143.

4Comments 3–6, 9–10, 12–14, 17–18, 20–21, 53,

151, and 155.

5Comments 22–24, 26–27, 29–33, 36–40, 42–50,

52, 54–56, 60–71, 74–81, 83, 85–128, 130–133, 136–

141, 144, and 154.

6Comments 28, 35, 57–59, 72–73, 84, 129, 134–

135, 145–150, and 152–153.

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Health Choice of

Northwest Missouri, Inc., et al.; Public

Comments and Response on Proposed

Final Judgment

Pursuant to the Antitrust Procedures

and Penalties Act, 15 U.S.C. § 16 (b)–(h),

the United States publishes below the

comments received on the proposed

Final Judgment in United States v.

Health Choice of Northwest Missouri,

Inc., et al., Civil Action No. 95–6171–

CV–SJ–6, United States District Court

for the Western District of Missouri,

together with the response of the United

States to the comments.

Copies of the response and the public

comments are available on request for

inspection and copying in Room 215,

Liberty Place Building, Antitrust

Division, U.S. Department of Justice,

325 Seventh Street, NW., Washington,

DC 20530, and for inspection at the

Office of the Clerk of the United States

District Court for the Western District of

Missouri, 200 United States Courthouse,

811 Grand Avenue, Kansas City,

Missouri 64106.

Rebecca P. Dick,

Deputy Director, Office of Operations,

Antitrust Division.

In the United States District Court for

the Western District of Missouri

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.

United States’ Response to Public

Comments

Pursuant to the requirements of the

Antitrust Procedures and Penalties Act,

15 U.S.C. § 16 (b)–(h) (‘‘Tunney Act’’),

the United States hereby responds to the

public comments received regarding the

proposed Final Judgment in this case.

I

Background

On September 13, 1995, the United

States filed the Complaint in this matter.

The Complaint alleges that Defendants,

in violation of Section 1 of the Sherman

Act, 15 U.S.C. § 1, conspired to prevent

the development of competitive

managed care health plans in Buchanan

County, Missouri by, among other

things, negotiating fees on behalf of

most of the physicians in Buchanan

County and forming an unlawfully

structured physician-hospital

organization. Complaint ¶¶ 24 and 25.

Simultaneously with the filing of the

Complaint, the United States filed the

proposed Final Judgment, a Competitive

Impact Statement (‘‘CIS’’), and a

Stipulation signed by all the parties that

allows for entry of the Final Judgment

following compliance with the Tunney

Act. The CIS explains in detail the

provisions of the proposed Final

Judgment, the nature and purpose of

these proceedings, and the practices

giving rise to the alleged violation.

As the Complaint and CIS explain,

85% of all the physicians living or

practicing in Buchanan County agreed

to negotiate collectively fees and other

contract terms with managed care plans

seeking to enter Buchanan County, with

the purpose and effect of increasing

physician fees and controlling the

development of competitive managed

care health plans in Buchanan County.

Together with the only hospital in

Buchanan County, they also formed

Defendant Health Choice of Northwest

Missouri, Inc. (‘‘Health Choice’’) to

provide managed care. At no time did

the competing physicians share

financial risk or otherwise integrate

their practices.

Since the formation of Health Choice

and until the filing of the Complaint, no

managed care plan had been able to

enter Buchanan County without

contracting with Health Choice, despite

the efforts of several plans to do so. By

refusing to deal with managed care

plans seeking to enter Buchanan County

except through Health Choice,

Defendant Heartland System, Inc.

(‘‘Heartland’’) and the physicians

belonging to Defendant St. Joseph

Physicians, Inc. (‘‘SJPI’’) 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.

The overarching goal of the proposed

Judgment is to prevent Defendants from

discouraging the development of

competitive managed care in Buchanan

County, while still permitting

defendants to market a providercontrolled plan. The proposed Final

Judgment consequently deals with a

wide range of activities.

Except for publishing the comments

and this response in the Federal

Register, the plaintiff and defendants

have completed the procedures the

Tunney Act requires before the

proposed Final Judgment may be

entered.1 The 60-day period for public

comments expired on December 4, 1995.

As of March 27, 1996, the United States

had received 155 comments.

The comments come from a variety of

sources. The most comprehensive

comments were submitted by the

Coalition for Quality Healthcare

(‘‘Coalition’’), which describes itself as a

group of health care providers and

consumers in Northwest Missouri

(Comments 19, 34 and 82).2 Another

substantial comment is Comment 51,

the comment of an unnamed ancillary

services provider (i.e., provider of home

health care, hospice care, outpatient

rehabilitation services, or durable

medical equipment) located outside of

Missouri. Nine comments were

submitted by Buchanan County

citizens,3 in addition to 16 comments

from Buchanan County ancillary

services providers.4 A total of 105

comments were submitted by either

ancillary services providers’ trade

associations or individual ancillary

services providers located outside of

Buchanan County.5 Finally, 19

comments were submitted by hospitals

located outside of Buchanan County.6

II

Response to Comments

A. Overview

None of the comments oppose the

main provisions of the proposed Final

Judgment (Sections IV (C) and (D), V (C)

and (D), and VI(B)). Only one, Comment

41, suggests that the Judgment fails to

redress the violation of federal antitrust

laws alleged in the Complaint. That

Comment, and one other dealing with

the composition of the Health Choice

provider panel (Comment 2), are

addressed in Subsection B below.

The remaining 153 comments relate

almost exclusively to how the proposed

Final Judgment deals with Heartland’s

referral policy regarding ancillary

services, a copy of which is attached to

the proposed Final Judgment. Most of

these comments urge that the ancillary

services referral policy should either be

changed or deleted from the Judgment.
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29801

7This Response addresses all of the antitrust

issues and issues relating to the substance of the

Complaint and proposed Final Judgment that are

raised in the comments. Unrelated arguments and

objections are not discussed. For example, the nine

comments from private citizens in Buchanan

County complain primarily about the quality of

services and billing practices of Heartland. These

complaints do not involve antitrust concerns, they

are irrelevant to this case, and the Antitrust

Division of the United States Department of Justice

lacks authority to consider or address them.

8Comment 2, from Robert S. Keller, O.D. of St.

Joseph, Missouri, argues that the Health Choice

provider panel violates Medicare regulations by

excluding optometrists. The proposed Final

Judgment, however, does not preclude Health

Choice from having optometrists or any other type

of provider on its panel. Furthermore, this issue has

nothing to do with the antitrust violation alleged in

the Complaint, which the proposed Final Judgment

seeks to remedy.

9The Coalition’s model referral policy appears as

Exhibit 9 to the Memorandum In Opposition To

Proposed Final Judgment appended to the

Coalition’s December 1, 1995 Motion To Appear As

Amicus (Comment 82), which the government is

addressing as a comment.

10Many of the comments urged that the decree

require Heartland to use a rotation system by which

referrals would be distributed among Heartland and

the other ancillary services providers. Such a

system would eliminate or reduce competition by

allocating patients and would raise serious antitrust

concerns. Palmer v. BRG, Inc., 498 U.S. 46; United

States v. Heffernan, 43 F.3d 1144, 1146–47 (7th Cir.

1994) (Posner, J.) (bid rotation agreement eliminates

all competition among the participants and hence

is even more serious than price fixing, which

preserves competition in quality of service).

They raise five different antitrust issues

that are addressed in Subsections C

through G below.

Finally, Subsection H addresses the

Coalition’s contentions about the

provisions of the proposed Final

Judgment limiting Heartland’s

acquisition of physician practices

(Comments 34 and 82). Subsection I

addresses the Coalition’s objections to

the Judgment’s compliance provisions

(Id.).7

B. The Provider Panel Provisions

Adequately Protect Competition

Commenter David L. Hutchinson of

East Lansing, Michigan, Comment 41,

suggests that the proposed Final

Judgment will not be effective in

allowing for the development of

competitive managed care in Buchanan

County because the Judgment permits

too many Buchanan County physicians

to participate on the Health Choice

provider panel. In particular, Mr.

Hutchinson is concerned because

‘‘Health Choice still retains 85% of the

physicians working or residing in the

area, this is still a monopoly because the

remaining 15% will not be able to

adequately compete in the quantity of

service which they provide.’’

The United States agrees that there

would be reason for concern if 85% of

the physicians working or living in

Buchanan County were owners of a

Buchanan County managed care plan

that negotiated with payers. As the CIS

explains, the concern in such a situation

is that there would be an insufficient

number of physicians remaining in the

market with the incentive to contract

with competing managed care plans that

might seek to enter Buchanan County,

or to form their own plans. CIS at 17.

This would likely increase the cost to

consumers of obtaining health care

services in Buchanan County.

The proposed Final Judgment,

however, does not permit such a

situation. The Defendants are not

permitted to negotiate on behalf of

competing physicians unless they meet

the requirements of a qualified managed

care plan. Proposed Final Judgment

Sections IV (C) and (D), V (C) and (D),

and VI(B). As explained in the CIS

(pages 16–17), in order to satisfy those

requirements, no more than 30% of the

physicians in any relevant market may

be owners of the plan. Id., Section

II(I)(2). While the plan may, if it wishes,

contract with more, or even all, of the

remaining doctors (as non-providerowned managed care plans are able to

do), the plan may do that only if it is

at risk for overcharging or

overutilization by those subcontracting

physicians. Id. This ensures that there

will be a substantial pool of physicians

in Buchanan County who have the

incentives to contract with, or form their

own, rival managed care plans in

Buchanan County.8 See CIS at 17–19.

C. The Referral Policy Provision Is

Appropriate and Adequate Relief for the

Violation Alleges in the Complaint and

Will Encourage, Not Impinge Upon,

Patient Choice

Heartland’s ancillary services referral

policy, with which Heartland must

comply under the proposed Final

Judgment, essentially requires Heartland

representatives to inquire if the patient

has a choice of ancillary services

providers and then to honor that choice.

The policy is designed to ensure that the

patient has the opportunity to use an

ancillary services provider other than

Heartland if the patient so wishes. Many

commenters contend that this referral

policy is not in the public interest

because they believe other policies

would better ensure that patients will be

able to make informed choices in

selecting ancillary services providers.

In opposing the referral policy of the

proposed Final Judgment, the Coalition

contends that the policy, ‘‘violates a

consumer/patient’s right to make an

informed choice among all ancillary

services providers’’ and that it

‘‘enhances Heartland’s capacity to

monopolize the ancillary services

market within Northwest Missouri and

Northeast Kansas.’’ Comment 82 at 2.

The Coalition urges that the referral

policy provision be deleted or, as an

alternative, that the Court order

Heartland to adopt the model referral

policy that the Coalition developed after

submitting its formal Comment

(Comment 34) on November 21, 1995.9

The Coalition’s model policy would

require Heartland to allow on its

premises an ‘‘ombudsman,’’ whose

‘‘salary and expenses could be shared

equally among the competitors

(including Heartland), in order to

preserve the ombudsman’s

independence’’ (Comment 82 at 17), and

who would ‘‘operate[ ] as an

independent social worker’’ in order to

‘‘fully inform the patient of his options

and see that the patient is given the

freedom to choose any ancillary services

provider.’’ (Comment 82 at Exhibit 9).

Clearly, deleting the proposed

Judgment’s referral policy would

weaken rather than strengthen the

Judgment. Further, appointment of an

ombudsman paid for collectively by all

ancillary services providers, a novel

remedy, is unnecessary here. Requiring

Heartland to observe its already

promulgated policy regarding referrals

for ancillary services, which provides

for ready access by patients to

information about the full range of

ancillary services providers, is a wholly

effective remedy for the specific

antitrust violation alleged in the

Complaint and well within the reaches

of the public interest within the

meaning of the Tunney Act. Cf., United

States v. Microsoft Corp., 56 F.3d, 1448,

1459–60 (D.C. Cir. 1995)(decree

adequate if within reaches of public

interest).10

The Coalition is incorrect in asserting

that the proposed Final Judgment

‘‘prevents patients from making an

informed choice regarding ancillary

services.’’ (Comment 82, Memorandum

In Opposition To Proposed Final

Judgment, at 5, emphasis supplied). The

proposed Final Judgment requires that

Heartland (1) must honor a physician’s

order of a specific ancillary services

provider unless the patient overrides

that decision, (2) must ask the patient if

the patient has a preference for an

ancillary services provider and must

honor any such preference, (3) must not

tell the patient about Heartland’s

ancillary services providers unless the

patient states he or she has no

preference among ancillary services

providers, (4) must honor the patient’s
29802 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

11Heartland’s attorney has told us that Heartland

is considering adopting the attached revised referral

policy. Basically, that policy would have Heartland

personnel provide a list of Buchanan County

ancillary services providers, rather than the

telephone book, to patients requesting information

about non-Heartland ancillary services providers. It

also requires Heartland to explain to a patient who

is an enrollee in a managed care plan the financial

consequences to the patient of not using the plan’s

preferred ancillary services provider. This revision

contains protections for Heartland patients in

addition to those required by the Final Judgment.

Adoption of the revision would not violate the

Final Judgment and does not require amendment of

the Final Judgment. Implementation of the revision,

given the presence of other provisions in the

proposed Final Judgment, would largely dispose of

the objections raised in Comments 23, 27, 52, 67,

79, 94, 98, 126, and 138.

12Several other provisions are also incorporated

into the proposed Final Judgment to ensure that

patients and insurers are not coerced into using

Heartland’s ancillary services. Section VI(E)

prohibits Heartland from forcing managed care

plans in which Heartland does not have a financial

interest from using Heartland’s ancillary services in

order to get Heartland’s hospital services. Also,

Section VII(B)(3) allows the United States access to

Heartland’s credentialing files to ascertain if

Heartland has curtailed the hospital privileges of a

physician employed by or affiliated with a

competing managed care plan. The United States

could also ascertain if Heartland had limited

hospital privileges of a physician for ordering

ancillary services from a vendor other than

Heartland for any patient.

13For example, the United States has been

informed by the Missouri Attorney General’s Office

that the Missouri Attorney General is investigating

Heartland’s ancillary services referral practices, and

other practices, to determine their legality under the

Missouri Merchandising Practices Act, § 407.020

RSMo, and the Missouri Antitrust Law, §§ 416.031

RSMo. The proposed Final Judgment does not

preclude or preempt any legal action by the

Missouri Attorney General, or by private parties,

seeking broader injunctive relief or different types

of relief under either those laws or the federal

antitrust laws. Moreover, in agreeing to this

proposed Final Judgment, the United States does

not express any view as to whether any of the

practices permitted by the Attachment to the Final

Judgment would be ‘‘unfair’’ within the meaning of

the Missouri Merchandising Practices Act,

§ 407.020 RSMo.

14The Coalition, for example, asserts that the

ancillary services provision of the proposed Final

Judgment is inconsistent with hospital accreditation

standards and Medicare regulations, primarily

because ‘‘Heartland’s referral policy does not allow

ancillary services providers, who have an

established relationship with the patient before

admission to Heartland’s acute care hospital, to

participate in discharge planning for their patients.–

.–.–.’’ (Comment 82 at 13).

choice if the patient decides not to use

the Heartland ancillary services

providers, and, if asked, (5) must tell the

patient that there are non-Heartland

ancillary services providers who are

listed in the telephone book, give the

patient a reasonable amount of time to

investigate other options, and then

honor whatever choice the patient

makes. If the patient again requests the

names of other ancillary services

providers, Heartland must name those

providers.11

As numerous comments illustrate,

there are myriad alternative provisions

that could be proposed to resolve the

hospital ancillary services referral issue.

The government does not dispute that

some of these may be reasonable

alternatives. That, however, is not a

sufficient reason to reject the negotiated

settlement of this case, which provides

adequate and appropriate relief to

remedy the violation in this case and

prevent its recurrence. Microsoft, 56

F.3d at 1460–61.

Significantly, the Complaint in this

case did not charge Heartland with

specific violations in the ancillary

services market. Rather, the Complaint

focuses on Heartland’s efforts, along

with the other defendants, to impede

the development of competitive

managed care health plans in Buchanan

County. The ancillary services provision

(Section VII(B)(1)) in the proposed Final

Judgment is intended as a preventive

measure to ensure that Heartland will

follow its own preexisting ancillary

services referral policy so that it will not

abuse its market position in inpatient

hospital services to restrict competition

in the market for ancillary services by

deterring managed care plans or other

health care consumers from contracting

with alternative ancillary services

providers.

Finally, at least one comment suggests

that the referral policy provision should

be stricken from the Judgment because

the Complaint does not allege a specific

violation involving ancillary services

but rather focuses more broadly on

efforts to hamper the development of

managed care in Buchanan County.

Comment 82 at 2, 16. There is no

requirement that the government’s

Complaint specifically mention

Heartland’s ancillary services activities

in order to include ancillary services

relief in the Final Judgment. Relief in a

consent decree is appropriate as long as

it is within the general scope of the case.

Int’l Assn. of Firefighters v. City of

Cleveland, 478 U.S. 501, 525 (1986).

The ancillary services provision of the

proposed Final Judgment will help to

prevent the recurrence of collaborative

efforts to discourage the development of

competitive managed care plans in

Buchanan County, which is specifically

alleged in the Complaint, and in the

process also stop attempts to restrain

competition in the provision of ancillary

services to patients who are either

uninsured or covered by other types of

medical insurances. In particular, the

ancillary services provision ensures that

Heartland will honor the decisions of

patients or their insurers regarding

choice of ancillary services providers.12

D. The Referral Policy Provision Has No

Preemptive Effect

Several commenters suggest that the

ancillary services provision of the

proposed Final Judgment will have de

jure or de facto preemptive effect on

other cases. This is not correct.

It is well established that ‘‘a consent

judgment, even one entered at the

behest of the Antitrust Division, does

not immunize the defendant from

liability for actions, including those

contemplated by the decree, that violate

the rights of nonparties.’’ Broadcast

Music, Inc. v. Columbia Broadcasting

System, Inc., 441 U.S. 1, 13 (1979).

Ancillary services providers and others

consequently remain free to pursue their

own federal or state antitrust or other

actions against Heartland for any

activity they believe is illegal, and they

may seek whatever remedy they deem

appropriate. The ancillary services

provision in this matter, therefore, does

not have any ‘‘preemptive effect’’ upon

the relief claimable by any plaintiff

against Heartland or any other hospital,

and would not prevent a court, in an

appropriate case, from requiring

different, or more expansive, relief.13

The proposed Final Judgment also

does not establish a national ceiling, or

even a ceiling in Buchanan County, on

what can or may be in a hospital

ancillary services referral policy. The

ancillary services provision in the

proposed Judgment is simply, on the

facts and in the procedural setting of

this case, adequate relief to protect

against the possibility that Heartland

could use its market position in

inpatient services to restrict competition

in the market for ancillary services.

E. Heartland May Comply With Federal

or State Laws or Further Protect the

Patient’s Right To Choose

Several commenters have suggested

that the ancillary services provision of

the proposed Final Judgment conflicts

with hospital accreditation standards

and various federal and state laws and

regulations.14 There have also been

claims that the proposed Final Judgment

precludes Heartland from adopting

additional measures intended to assist

Heartland patients in choosing ancillary

services providers. None of these claims

and suggestions is correct.

Section VII(B)(1) of the proposed

Final Judgment requires only those

steps needed to correct or prevent

competitive problems alleged or similar

to those alleged in the Complaint.

Heartland in addition is independently

obligated to comply with hospital

accreditation standards, Medicare

regulations, state or federal laws, or the
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29803

15This may be why Heartland’s ancillary services

rivals lost referrals. See Comment 82 at 12–13. If so,

the proposed Final Judgment will correct the

problem. Of course, another explanation for this

loss of referrals may be that Heartland began

offering better care and service, i.e., that it was

successfully competing on the merits. This would

be lawful competition properly left in place by the

proposed Final Judgment. Cargill, Inc. v. Monfort,

Inc., 479 U.S. 104, 116 (1986).

16At least four courts have refused to consider

Key Enterprises because it has been vacated:

Pacifica Kidney Center, Inc. v. National Medical

Care, Inc., 1993 WL 190858 (9th Cir. 1993)

(unpublished disposition) at **4 n. 3; Home Health

Specialists, Inc. v. Liberty Health System, 1994–2

Trade Cas. ¶ 70,699 (E.D. Pa. 1994) at p. 72,794;

Atlanta Pulmonary Diagnostic Clinic v. Haynes,

1994 WL 258260 (N.D. Ga. 1994); and Northwest

Title And Escrow Corp. v. Edina Realty, Inc., 1994–

1 Trade Cas. ¶ 70,485 (D. Minn. 1993).

decrees in other state or federal law

suits, including, if necessary, permitting

outside ancillary services providers to

participate in patient discharge

planning. Moreover, as far as the

government has been able to determine,

nothing in the Heartland ancillary

services referral policy, with which

Section VII(B) of the proposed Final

Judgment requires Heartland to comply,

requires Heartland to do anything that

any hospital accreditation standard or

any federal or state statute, rule, or

regulation of which the United States is

aware prohibits. (See attached Joint

Commission For Accreditation Of

Healthcare Organizations accreditation

standards and Medicare patient

discharge planning regulations).

F. The Referral Policy Does Not Harm

Heartland’s Rivals or Buchanan County

Consumers

The Coalition also contends that the

referral provision will lead to a

deterioration of competition in the

provision of ancillary services in

Buchanan County. E.g., Comment 82 at

3–4, 10–13. But these contentions

assume that before the proposed Final

Judgment was negotiated, Heartland was

following an ancillary services referral

policy that was more favorable to

competing providers than the policy put

in place by the Final Judgment. In fact,

the government’s investigation revealed

that Heartland, before accepting the

proposed Final Judgment, may not have

always been in compliance with its

stated policy.15 Coalition members and

Buchanan County citizens will be better,

not worse, off as a result of the proposed

Final Judgment since the Judgment will

now ensure compliance.

Microsoft, supra, recently noted in a

strikingly similar context that ‘‘[w]hile

the district court may inquire into

whether a decree will result in any

positive injury to third parties * * *, in

the absence of such injury, it should not

reject an otherwise adequate remedy

simply because a third party claims it

could be better treated.’’ 56 F.3d at 1461

n.9 (emphasis supplied). There was no

positive injury to third parties in

Microsoft, and there is none in the

present case. In fact, competitors and

consumers are benefited by the

proposed Final Judgment.

G. The Ancillary Services Relief is

Consistent With the Federal Antitrust

Laws

Comment 51 suggests more explicitly

than any of the other comments that the

Heartland Referral Policy, which

Section VII(B)(1) of the proposed Final

Judgment requires Heartland to follow,

is inconsistent with the federal antitrust

laws, and more particularly, with Key

Enterprises, Inc. v. Venice Hospital, 919

F.2d 1550 (11th Cir. 1990), vacated,

reh’g en banc granted, 979 F.2d 806

(11th Cir. 1992), order granting en banc

review vacated, 9 F.3d 893 (11th Cir.

1993 (per curiam), cert. denied sub nom.

Sammett Corp. v. Key Enterprises,

Inc.,lU.S.l, 114 S.Ct. 2132 (1994).

Relying on the later-vacated Key

Enterprises decision, this comment

contends that Heartland should be

required to disseminate information

about its ancillary services competitors,

and to allow such competitors access to

Heartland’s hospital patients. Anything

less would be, in the words of the

Comment, ‘‘inconsistent with federal

antitrust policy. * * *’’ Comment 51 at

2.

The ancillary services provision of the

proposed Final Judgment is consistent

with both the federal antitrust laws and

Key Enterprises. Key Enterprises was

never finally resolved by the courts. A

panel of the Court of Appeals reversed

a trial court order that had overturned

a $2.3 million jury verdict in favor of a

durable medical equipment supplier

who claimed that a hospital with 76%

of the available beds in a local market

had violated Sections 1 and 2 of the

Sherman Act by coercing or unduly

influencing home health agencies in

that community to refer their patients to

a durable medical equipment supplier

in which the hospital had a financial

interest. 919 F.2d at 1553, 1555.

Significantly, no injunctive or other

equitable relief was at issue in Key

Enterprises. The case was vacated after

the Eleventh Circuit granted rehearing

en banc and then settled prior to en

banc review.16

Moreover, as noted earlier, this case is

not about ancillary services markets.

Heartland was not charged with

restraining trade in or monopolizing any

ancillary services market. Rather,

Heartland was charged with conspiring

with physicians to discourage the

development of competitive managed

care in Buchanan County. The ancillary

services provision of the proposed Final

Judgment is prophylactic, intended

simply to prevent Heartland from

exploiting its position in additional

ways. The provision is effective and

well within the bounds of the public

interest. Nothing in Key Enterprises or

any other decision requires this

Judgment to contain any more relief

than it does.

H. The Physician Practices Acquisitions

Provisions are Adequate To Remedy the

Violation Alleged in the Complaint

The Coalition criticizes the provisions

of the proposed Final Judgment that

place limits and controls on Heartland’s

acquisition of physician practices.

Comment 34 at 6; Comment 82 at 18–

19. The Coalition argues that ‘‘the

practical effect’’ of three of those

provisions, Sections VIII(B)–(D), will be

to allow Heartland to ‘‘monopolize the

market for primary care physicians in

Northwest Missouri and Northeast

Kansas. * * *’’ Comment 82 at 19.

The Judgment’s physician practices

acquisitions provisions, Sections VI(D)

and VIII(B)–(D) of the decree, are, in

conjunction with the physician

credentialing provision of the proposed

Final Judgment (Section VII(B)(3)),

sufficient to ensure the development of

conditions that permit the growth of

competitive managed care in Buchanan

County. They certainly will not promote

the monopolization of primary care

physician services in Northwest

Missouri or Northeast Kansas.

Section VI(D) is the primary provision

in the proposed Final Judgment

regarding physician practices

acquisitions. CIS at 20. It enjoins

Heartland from acquiring during the

next five years additional existing

family practice and general internal

medicine physician practices in

Buchanan County without the prior

written approval of the United States,

and from acquiring any other existing

active physician practice in Buchanan

county without 90 days’ prior

notification. Section VI(D) was designed

to, and will, prevent Heartland from

obtaining control of so many physicians

that it could raise prices for physician

services above competitive levels or

otherwise thwart competing managed

care plans from entering and competing

effectively in Buchanan County.

Sections VIII(B)–(D) set forth the

exceptions to Section VI(D). Section

VIII(B) allows Heartland to acquire the

practice of a physician who derives only

limited revenues (less than 20% of total
29804 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

17By its terms, this provision would not apply if

any firm other than Heartland made a bona fide

offer to purchase the practice for a price above the

liquidation value of the practice. 4 CCH Trade Reg.

Rpt. ¶13,104 at 20,574.

18The Associated Milk Producers decree, even as

supplemented by Judge Oliver, did not contain this

provision. 394 F. Supp. at 49–58.

19 Indeed, Judge Oliver in a subsequent

government antitrust consent decree did not order

these supplemental provisions. United States v.

Mid-American Dairymen, Inc., 1977–1 Trade Case.

¶ 61,508 (W.D.Mo. 1977).

20The Western Electric decision concerned a

consensual modification of an existing antitrust

decree. The Court of Appeals assumed that the

Tunney Act was applicable.

practice revenues) from patients in

Buchanan County (i.e., the established

physician working primarily outside of

Buchanan County and hence whose

practice has little competitive impact in

Buchanan County). Section VIII(C)

allows Heartland to acquire within the

first two years of a physician’s arrival in

Buchanan County the practice of any

physician who Heartland actively

recruited to Buchanan County (i.e., the

new physician who would not have

come to Buchanan County but for

Heartland and whose practice is not yet

sufficiently established to have an

independent competitive impact on the

market). Section VIII(D) allows

Heartland to acquire the practice of any

family practice or general internal

medicine physician already in

Buchanan County who otherwise would

no longer practice primary care

medicine in Buchanan County (i.e., the

established physician working primarily

in Buchanan County whose practice

may have a significant independent

competitive impact on the market but

who is otherwise going to exit the

market).

None of these three limited

exceptions will result in the

monopolization or a substantial

lessening of competition in the

physician services market in Buchanan

County. Rather, Sections VI(D) and VIII

(B)–(D), in conjunction with the

physician credentialing provision

(Section VII(B)(3)), will ensure that

Heartland does not achieve by

acquisition or credentialing the

anticompetitive result (preventing the

development of competitive managed

care) that it initially sought to

accomplish through agreement with the

physicians of Buchanan County, and

which is at the heart of the antitrust

violation alleged in the Complaint.

These provisions will result, at least for

the near future, in the continued

presence, if not the increase, of a

substantial pool of primary care and

other physicians not employed by

Heartland in Buchanan County.17

That continuing pool of primary care

and other physicians not employed by

Heartland will also protect competition

in ancillary services markets in

Buchanan County. Comment 34 at 2, 5,

6; Comment 82 at 19. The Coalition

correctly notes that many hospitalized

patients look to their physician to

recommend an ancillary services

provider. Comment 34 at 2. There is

consequently likely to remain during

the term of this Judgment a substantial

stream of ancillary services referrals

from doctors who are not employed by

Heartland and who therefore will not

automatically refer their patients to

Heartland’s ancillary services providers.

Furthermore, the referral policy with

which Heartland must comply (Section

VII(B)(1) of the decree) will significantly

curtail any adverse impact on

competition in ancillary services in

Buchanan County from possible future

Heartland purchases of Buchanan

County physician practices. The policy

specifically requires Heartland to ask,

and honor, a hospitalized patient’s

choice of ancillary services provider.

Heartland must do that even if the

patient’s choice is different from the

doctor’s and the doctor is an employee

of Heartland.

The Coalition also suggests that the

proposed Final Judgment is deficient

because it does not prohibit Heartland

from bringing into Buchanan County a

physician who has not previously

practiced there. Comment 34 at 6;

Comment 82 at 18. By increasing the

supply of physicians in Buchanan

County, such conduct could be

procompetitive. The proposed Final

Judgment therefore does not proscribe

this activity. The United States,

moreover, remains free to challenge

such actions in the future in a separate,

independent antitrust action if this

activity should prove to be

anticompetitive.

I. The Compliance Provisions Are

Sufficient

The Coalition also believes that two of

the compliance provisions of the

proposed Final Judgment, Sections X

and XI, should be modified to (1)

require the defendants to submit written

reports and the United States to conduct

at least annual inspections, and (2) give

the Court broader powers to monitor

and enforce the Judgment as Judge

Oliver required in United States v.

Associated Milk Producers, Inc., 394 F.

Supp. 29, 46 (W.D. Mo. 1975). Comment

34 at 7; Comment 82 at 19–20. The

United States believes that the

compliance provisions of the proposed

Final Judgment as they now stand are

fully adequate to deter, detect, and

correct any decree violations.

Sections X and XI of the proposed

Final Judgment are standard judgment

compliance provisions that the

government has used repeatedly in its

consent decrees and litigated judgments

over the 20 years since Associated Milk

Producers was entered. They include

the requirement that Defendants obtain

from their appropriate personnel, and

maintain for the government’s

inspection, annual written certifications

that each such person (1) has read and

agrees to abide by the Judgment, (2)

understands that noncompliance with

the Judgment may result in criminal

contempt of court, and (3) has reported

any violation of the Judgment to counsel

for that Defendant.18 Furthermore,

Section XII of the proposed Final

Judgment, another standard decree

compliance provision, allows the

government to (1) inspect and copy

records or documents of any of the

Defendants relating to matters contained

in the Judgment, (2) interview personnel

of any of the Defendants about such

matters, and (3) require any of the

Defendants to submit written reports,

under oath if necessary, about any such

matter.

The commenters do not suggest that

these customary judgment compliance

provisions have been inadequate to

uncover and remedy decree violations

in the government’s earlier judgments.

Nor do they offer any reason to expect

a different result here.19 The

government will not hesitate, as the

proposed Final Judgment permits

(Section IX), to seek a modification of

Sections X and XI if these provisions in

practice prove to be inadequate to

properly enforce this decree.

III

The Legal Standard Government the

Court’s Public Interest Determination

Once the United States moves for

entry of the proposed Final Judgment,

the Tunney Act directs the Court to

determine whether entry of the

proposed Final Judgment ‘‘is in the

public interest.’’ 15 U.S.C. § 16(e). In

making that determination, ‘‘the court’s

function is not to determine whether the

resulting array of rights and liabilities is

one that will best serve society, but only

to confirm that the resulting settlement

is within the reaches of the public

interest.’’ United States v. Western Elec.

Co., 933 F.2d 1572, 1576 (D.C. Cir.),

cert. denied, 114 S. Ct.487 (1993)

(emphasis added, internal quotation and

citation omitted).20 The Court should

evaluate the relief set forth in the

proposed Final Judgment and should

enter the Judgment if it falls within the
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29805

21The Tunney Act does not give a court authority

to impose different terms on the parties. See, e.g.,

United States v. American Tel. & Tel. Co., 552 F.

Supp. 131, 153 n. 95 (D.D.C. 1982), aff’d sub nom.

Maryland v. United States, 460 U.S. 1001 (1983)

(Mem.); accord H.R. Rep. No. 1463, 93d Cong., 2d

Sess. 8 (1974). A court, of course, can condition

entry of a decree on the parties’ agreement to a

different bargain, see, e.g., AT&T, 552 F. Supp. at

225, but if the parties do not agree to such terms,

the court’s only choices are to enter and decree the

parties proposed or to leave the parties to litigate.

22Citing United States v. Central Contracting Co.,

537 F. Supp. 571 (E.D.Va. 1982), the Coalition wrote

the government in November 1995 and requested

all ‘‘determinative’’ materials and documents called

for by 15 U.S.C. § 16(b) (Comment 19). The United

States replied that there are no such materials or

documents. The Coalition suggests in Comment 82

that this response shows that ‘‘the DOJ has not been

forthcoming with disclosure of the underlying

factual materials supporting the proposed policy.’’

Memorandum In Opposition To Proposed Final

Judgment at 5. The Coalition suggests, apparently

because of Associated Milk Producers, that the

government’s response requires the Court to make

a more careful review in this instance than might

otherwise be the case. This approach is

unwarranted in the present matter even if the

Coalition’s reading of Associated Milk Producers is

correct. Here there simply are no documents which,

either along or as a group, have such singular or

particularized significance as to be ‘‘determinative’’

under 15 U.S.C. § 16(b). The Coalition is incorrect

in suggesting that the Department never produces

determinative documents. The Department has

done so in 19 cases since the Central Contracting

decision.

23Managed care plans in general are making

greater use of competition among ancillary services

providers to reduce premium costs and to reduce

the number and duration of hospitalizations. See,

e.g., K. O’Donnell & E. Sampson, ‘‘Home Health

Care: The Pivotal Link In The Creation Of A New

Health Care Delivery System, Journal of Health Care

Finance, Volume 21, No. 2, pages 74–86 (1994); and

G. Leavenworth, ‘‘The Fastest Growing Segment Of

The Health Care Industry Combines Cost-Effective,

High—Quality Care With The Comforts Of Home,’’

Business & Health, vol. 13, special issue, p. 51 (Jan.

1995).

government’s ‘‘rather broad discretion to

settle with the defendant within the

reaches of the public interest.’’

Microsoft, 56 F.3d at 1461. Accord,

Associated Milk Producers, 534 F.2d at

117–18.

The Court is not ‘‘to make de novo

determination of facts and issues.’’

Western Elec., 993 F.2d at 1577. Rather,

‘‘[t]he balancing of competing social and

political interests affected by a proposed

antitrust decree must be left, in the first

instance, to the discretion of the

Attorney General.’’ Id. (internal

quotation and citation omitted

throughout). In particular, the Court

must defer to the Department’s

assessment of likely competitive

consequences, which it may reject ‘‘only

if it has exceptional confidence that

adverse antitrust consequences will

result—perhaps akin to the confidence

that would justify a court in overturning

the predictive judgments of an

administrative agency.’’ Id.21

The Court may not reject a decree

simply ‘‘because a third party claims it

could be better treated.’’ Microsoft, 56 F.

3d at 1461 n.9. The Tunney Act does

not empower the Court to reject the

remedies in the proposed Final

Judgment based on the belief that ‘‘other

remedies were preferable.’’ Id. at 1460.22

As Judge Greene has observed:

If courts acting under the Tunney Act

disapproved proposed consent decrees

merely because they did not contain the

exact relief which the court would have

imposed after a finding of liability,

defendants would have no incentive to

consent to judgment and this element of

compromise would be destroyed. The

consent decree would thus as a practical

matter be eliminated as an antitrust

enforcement tool, despite Congress’ directive

that it be preserved.

United States v. American Tel. & Tel.

Co., 552 F. Supp. 131, 151 (D.D.C.

1982), aff’d sub nom. Maryland v.

United States, 460 U.S. 1001 (1983)

(Mem.).

Moreover, as noted above, the entry of

a governmental antitrust decree

forecloses no private party from seeking

and obtaining appropriate antitrust

remedies. Thus, Defendants will remain

liable for any illegal acts, and any

private party may challenge such

conduct if and when appropriate. If any

of the commenting parties has a basis

for suing Defendants, they may do so.

The legal precedent discussed above

holds that the scope of a Tunney Act

proceeding is limited to whether entry

of this particular proposed Final

Judgment, agreed to by the parties as

settlement of this case, is in the public

interest.

Finally, the Tunney Act does not

contemplate judicial reevaluation of the

wisdom of the government’s

determination of which violations to

allege in the Complaint. The

government’s decision not to bring a

particular case on the facts and law

before it at a particular time, like any

other decision not to prosecute,

‘‘involves a complicated balancing of a

number of factors which are peculiarly

within [the government’s] expertise.’’

Heckler v. Chaney, 470 U.S. 821, 831

(1985). Thus, the Court may not look

beyond the Complaint ‘‘to evaluate

claims that the government did not

make and to inquire as to why they were

not made.’’ Microsoft, 56 F.3d at 1459

(emphasis in original); See also, United

States v. Associated Milk Producers,

Inc., 534 F.2d 113, 117–18 (8th Cir.

1976), cert. denied, 429 U.S. 940 (1976).

Similarly, the government has wide

discretion within the reaches of the

public interest to resolve potential

litigation. E.g., United States v. Western

Elec. Co., 993 F.2d 1572 (D.C. Cir.), cert.

denied, 114 S. Ct. 487 (1993); United

States v. American Tel. & Tel. Co., 552

F. Supp. 131, 151 (D.D.C. 1982), aff’d

sub nom. Maryland v. United States,

460 U.S. 1001 (1983) (Mem.). The

Supreme Court has recognized that a

government antitrust consent decree is a

contract between the parties to settle

their disputes and differences, United

States v. ITT Continental Baking Co.,

420 U.S. 223, 235–38 (1975), United

States v. Armour & Co., 402 U.S. 673,

681–82 (1971), and ‘‘normally embodies

a compromise; in exchange for the

saving of cost and elimination of risk,

the parties each give up something they

might have won had they proceeded

with the litigation.’’ Armour, 402 U.S. at

681.

The ancillary services provision

(Section VII(B)(1)) in the proposed Final

Judgment is a preventive measure to

protect against the possibility that

Heartland could abuse its market

position in inpatient hospital services to

restrict competition in the market for

ancillary services by deterring managed

care plans or other heath care

consumers form contracting with

alternative ancillary services

providers.23 This Judgment has the

virtue of bringing the public certain

benefits and protection without the

uncertainty and expense of protracted

litigation. Armour, 402 U.S. at 681;

Microsoft, 56 F. 3d at 1459.

IV

Conclusion

After careful consideration of these

comments, the United States concludes

that entry of the proposed Final

Judgment will provide an effective and

appropriate remedy for the antitrust

violation alleged in the Complaint and

is in the public interest. The United

States will therefore move the Court to

enter the proposed Final Judgment once,

as 15 U.S.C. § 16(d) requires, the public

comments and this Response have been

published in the Federal Register.

Dated: May 17, 1996.

Respectfully submitted,
29806 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

lllllllllllllllllllll

Allen S. Vanbebber,

Deputy United States Attorney, Western

District of Missouri, Suite 2300, 1201 Walnut

Street, Kansas City, Missouri 64106–2149, Tel:

(816) 426–3122.

lllllllllllllllllllll

Edward D. Eliasberg, Jr.,

Gregory S. Asciolla,

Attorneys, Antitrust Division, U.S. Dept. of

Justice, Room 414, 325 7th Street, N.W.,

Washington, DC 20530, Tel: (202) 307–0808.

Certificate of Service

I, Edward D. Eliasberg, Jr., hereby

certify that copies of the Response to

Public Comments in U.S. v. Health

Choice of Northwest Missouri, Inc., et

al., was served on the 17th day of May

1996 by first class mail to counsel as

follows:

Thomas D. Watkins, Esquire, Watkins,

Boulware, Lucas, Miner, Murphy &

Taylor, 3101 Frederick Avenue, St.

Joseph, Missouri 64506–0217

George E. Leonard, Esquire, Shugart,

Thomson & Kilroy, 12 Wyandotte

Plaza, 120 West 12th Street, Kansas

City, Missouri 64105–0509

Richard D. Raksin, Esquire, Sidley &

Austin, One First National Plaza,

Chicago, Illinois 60603

Jack Briggs, Health Choice of Northwest

Missouri, Inc., 510 Francis Street, St.

Joseph, Missouri 64501

Brian B. Myers, Esquire, Lathrop &

Norquist, 2345 Grand Avenue, Suite

2600, Kansas City, Missouri 64108

Thomas M. Bradshaw, Esquire, Dianne

M. Hansen, Esquire, Armstrong,

Teasdale, Schlafly & Davis, Suite

2000, 2345 Grand Boulevard, Kansas

City, Missouri 64108

Glenn E. Davis, Esquire, Diane E. Felix,

Esquire, Armstrong, Teasdale,

Schlafly & Davis, One Metropolitan

Square, Suite 2600, St. Louis,

Missouri 63102–2704

lllllllllllllllllllll

Edward D. Eliasberg, Jr.

Hospital Inpatient—Ancillary Services

Referral Policy

I. General Statement

After a patient 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,

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 nonphysician referring person when

connecting patients to the appropriate

Ancillary Service. Our focus is on

patient choice.

II. 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. If necessary, the patient should be

informed of any financial considerations

(i.e., managed care). The patient should

then be asked whether the particular

provider 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 be

contacted and informed that his

physician has ordered an Ancillary

Service; if necessary, the patient should

be informed of any financial

considerations (i.e., managed care); and

the patient shall be asked if he has a

preference as to which provider to use:

1. If the patient has a preference, that

preference shall be honored.

2. If the patient has no preference, a

referring person shall indicate that

Heartland has an excellent, full

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 may

offer the Ancillary Service, and provide

the patient with the list of providers

attached. If appropriate, this list may be

provided verbally. [PATIENT SHALL

BE GIVEN A REASONABLE AMOUNT

OF TIME TO INVESTIGATE OTHER

OPTIONS.] If the patient at this point

chooses a provider, that choice shall be

noted on the patient’s chart and the

referral made to the provider chosen.

Copies of the Comments and the

United States’ Response to Public

Comments, with all omitted

attachments, are available for inspection

in Room 200, Liberty Place, (202/514–

2481), United States Department of

Justice, Washington, DC and at the

Office of the Clerk of the United States

District Court for the District of Western

Missouri, Kansas City, Missouri.

Lodging of Public Comments Regarding

Proposed Final Judgment

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.

Pursuant to the Antitrust Procedures

and Penalties Act, 15 U.S.C. §§ 16 (b)–

(h) (‘‘Tunney Act’’), Plaintiff United

States of America hereby lodges with

the Court the comments the government

has received to date from the public

regarding the Proposed Final Judgment

in this case.

Attached to this pleading is a log

listing for each comment the date the

government received the comment, the

date of the comment, the name and

address, if available, of the commenter,

the number of pages, and a brief

description of the comment.

As the log indicates, the government

received six comments in which the

commenter requested anonymity. While

those comments have been described in

the log, five of those comments have

been returned to their authors. The

government has explained to those

authors by means of accompanying

transmittal letters that comments in

Tunney Act proceedings become part of

the public record. The government has

invited each of these authors either

promptly to submit a revised comment

not disclosing the author’s identity or to

resubmit the original comment if the

author no longer objects to public

disclosure of the author’s identity.

The sixth comment is an anonymous

handwritten letter without return

address in which the author’s

supervisor at Defendant Heartland

Health System, Inc. is specifically

named and claimed to be the primary

cause of the problems in this matter.

That comment will not be made

available to the public unless the Court

desires the government to do so.

The government anticipates that it

soon will be filing its response to all the

comments, as required by the Tunney

Act, 15 U.S.C. § 16(d).

Dated: January 19, 1996.

Respectfully submitted,
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29807

lllllllllllllllllllll

Alleen S. Vanbebber,

Deputy United States Attorney, Western

District of Missouri, Suite 2300, 1201 Walnut

Street, Kansas City, Missouri 64106–2149, Tel:

(816) 426–3122.

lllllllllllllllllllll

Edward D. Eliasberg, Jr.,

Gregory S. Asciolla,

Attorneys, Antitrust Division, U.S. Dept. of

Justice, Room 9422, 600 E Street, NW.,

Washington, DC 20530, Tel: (202) 307–0808.

Certificate of Service

I, Edward D. Eliasberg Jr., hereby

certify that a copy of the foregoing

document was served on the 19th day

of January 1996 by first class mail to

counsel as follows:

Thomas D. Watkins, Esquire, Watkins,

Boulware, Lucas, Miner, Murphy &

Taylor, 3101 Frederick Avenue, St.

Joseph, Missouri 64506–0217

George E. Leonard, Esquire, Shugart,

Thomson & Kilroy, 12 Wyandotte

Plaza, 120 West 12th Street, Kansas

City, Missouri 64105–0509

Richard D. Raskin, Esquire, Sidley &

Austin, One First National Plaza,

Chicago, Illinois 60603

Jack Briggs, Health Choice of Northwest

Missouri Inc., 510 Francis Street, St.

Joseph, Missouri 64501

Brian B. Myers, Lathrop & Norquist,

2345 Grand Avenue, Suite 2600,

Kansas City, Missouri 64108

Thomas M. Bradshaw, Esquire, Dianne

M. Hansen, Esquire, Armstrong,

Teasdale, Schlafly & Davis, 1700 City

Center Square, 1100 Main Street,

Kansas City, Missouri 64105

Glenn E. Davis, Esquire, Dianne E. Felix,

Esquire, Armstrong, Teasdale,

Schlafly & Davis, One Metropolitan

Square, Suite 2600, St. Louis,

Missouri 63102–2704

lllllllllllllllllllll

Edward D. Eliasberg Jr.

Note: The following list indicates where

tables, newspaper articles and attachments

have been taken out, you can obtain copies

of these complete documents in our

Department of Justice, Premerger Office,

Liberty Place Building, ATR Division, Room

215, 325 Seventh Street, NW., Washington,

DC 20530.

1. Sept. 26, 1995 letter from Robert S.

Keller, O.D.

2. Letter from the Administrator of St.

Joseph Nursing Home

3. Anonymous note (had newspaper

articles)

4. Mark L. Wyble, Coordinator, Patient

& Community Relations from Total

Home Health Care

5. Oct. 3, 1995 from Citadel Health Care,

written by Lowell Fox,

Administrator

6. Nov. 4, 1995 letter from Richard C.

Bosworth, R.Ph., Coalition of

Quality Health Care

7. Nov. 20, 1995 letter, Hill Country

Health Services, Inc., from Ron

Julian, Administrator.

8. Nov. 19, 1995 letter, from Dennis O.

Davidson, M.D.

9. Nov. 23, 1995, Home Health Insights,

Inc., from Ross Feezer

10. Nov. 27, 1995, Shepard’s Crook

Nursing Agency, Inc., from Suzanne

Wilkinson, Administrator/Owner

11. Nov. 27, 1995, Metro Home Health

Care Services, Inc., from Richard A.

Porter, President/Administrator

12. Nov. 29, 1995, Kevin Miller, RRT,

RCP

13. Dec. 4, 1995, Gibson Health

Services, from Patricia A. Gibson,

RN, MPH

14. Dec. 4, 1995, Heritage Home Health

Inc., from Matthew F. Komac

15. Nov. 21, 1995, Metro Home Health

Care Services, Inc. from Richard A.

Porter

16. Anonymous letter (had clippings)

17. Feb 28, 1996, Missouri Alliance for

Home Care, from Dale E. Smith

September 26, 1995.

Gail Kursh,

Chief, Prof. & Intellectual Prop. Section/

Health Care Task Force

Dear Ms. Kursh: I am grateful for the

opportunity of writing to you regarding my

concerns with reference to Heartland Health

Systems here in St. Joseph.

I am a retired Senior Citizen and a patient

of a Dr. in the group aligned with the

hospital. I like my Dr. but don’t approve of

the monopoly the hospital has over the Dr.’s

services as well as options given to the

patients in several areas. Also, I understand

the referral to specialists is down-sized. The

Pres. of the hospital was quoted as saying ‘‘he

was not being paid to be stupid,’’ but he is

being paid to have integrity and high

standard of morals.

Yours truly,

Helen Kadera

P.S. I with so many, many others are

grateful that this situation is being

investigated.

Optometry

Dr. Joyce Keller Stroud

Dr. Robert S. Keller

3605 Faraon Street, St. Joseph, Missouri

64506, Telephone (816) 364–2000

26 September 1995.

Gail Kursh,

Chief, Intellectual Prop. Section, Health Care

Antitrust, U.S. Dept. of Justice, 600 E. St.

N.W., Room 9300, Washington, D.C.

20530

Dear Ms. Kursh: It is my hope that you

have received a copy of the St. Joseph News

Press of 24 September 1995.

I want to point out that the Heartland

Hospital new HMO, called Community

Health Plan, is excluding Optometry in

providing eye health care to its members.

I refer to total eye health, with the

exception of surgery. Optometrists can treat

most eye health conditions and recently in

Missouri, that included glaucoma.

Since 28 August 1995, I have sought an

opportunity to appear before the Board of

Community Health Plan to point out that

Medicare and Medicaid utilize the services of

Optometry to the fullest extent of their

licensure.

Enclosed is a copy of the regulations

defining the scope of the various professions.

Heartland is in the process of being the

gatekeeper for Medicaid in our area of

Missouri, and they cannot be allowed to

usurp Federal Regulations or any patients

right to choose.

Very truly yours,

Robert S. Keller, O.D.

Gail Kursh,

U.S. Dept Justice, 600 E St. N.W. Rm. 9300,

Washington, D.C. 20530

Dear Ms. Kursh: First, we don’t want to

talk against our Hospital as it is good to have

a hospital in our city. But we expect the

Hospital to be a Hospital, and not in

competition with nearly every business in

our town. Other businesses such as

pharmacies, medical supplies Insurances,

Nursing homes, all other nursing needs, such

as Home health care programs, laboratories,

rehab programs, and so on, it goes on and on.

We in the nursing home and convalescent

business have to go through the state of

Missouri to apply for Licenses and permits to

start a convalescent center, we are inspected

at least twice a year, more if they see fit. We

have many rules to go by. We have to be

approved by the State to operate. We don’t

think the same rules apply. Now Heartland

Health systems has taken over so many of the

services we had for years here in St. Joseph—

without any permission from the State of

Missouri without going through the processes

required for nursing facilities. They have

opened a skilled and intermediate care

nursing home without contacting the State or

going through the process. I have talked with

a Regional Manager for the Division of Social

Services and told him out plight, He said we

can’t do anything as Hospitals can do things

and we can’t say anything to them. There

surely is some regulations for them as well

as anyone else.

As of now in St. Joseph, MO. if the doctors

don’t belong to Heartland Health Systems,

they can’t take their patients there, which is

double expense. A Doctor used to be in his

office and the patient went there first, then

if they needed hospitalization, fine,

otherwise the Doctors office was cheaper.

Also now if you need medications, the

Doctors goes through Heartlands Pharmacy

which cuts our own Hometown pharmacies.

Our St. Joseph Surgical Supply is having a

rough time, our suppliers of Health Care are

all suffering and all nursing Homes are really

hurting. Our facility alone is over 40 patients

down and if we call a Doctor about anyone

who is sick, they immediately say send them

to the Hospital, we’ll check them out here,

which is very expensive. The ambulance

service here is terribly expensive and is
29808 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

owned by Heartland Health systems. This is

another reason the Medicare program is

suffering and Doctors could come to the

Nursing facilities to see their patients as in

the past but they seldom do that now.

Mr. Kruse not only has bought up the Drs.

offices and buildings and clinics around St.

Joseph and areas outside of St. Joseph, the

Doctors had to join Heartland in order to use

the hospital. An official of our State, said it

would be good for the government to look

into other hospitals he has worked for.

If all our nursing homes are forced to close,

it would be a big loss to our city businesses,

where we buy our supplies, also the

employees would be out of work and we as

business owners would be hurt. The banks

that loaned us money to build and operate.

I understand the money Heartland’s loans

come from outside the St. Joseph area.

The min trouble we have with Heartland

is the when we send our patients to them as

have for years, instead of returning them to

us for their rehab, and care, they are

transferring them to their skilled and

intermediate care units, until there Medicare

days are used.

Two of our employees have met and talked

with Heartlands Social Service Dept. they

made the remark, ‘‘we have to send them to

our nursing home, we don’t have a choice.

Their Social Service Dept. call daily to

check on vacancies, of which we have 40.

However refferals are few and far between. In

the past the majority of our patients came

from the hospital.

We in the health care business in St.

Joseph are all hurting, we appreciate any

effort to stop Heartlands monopoly.

Sincerely;

Administrator St. Joseph Nursing Home.

Dear Sir: We are all so very upset—We owe

thousands of dollars on our nursing home—

It’s rather new & the bank didn’t want to loan

money to a nursing home they didn’t feel

secure because of something that happened

years ago—Finally they did—Now this we

are down over 40 beds & no hope. If we call

& doctor he tells us to send them out to the

hospital & he’ll see them. Ambulance is

$400.00 just for that. Then they keep the

patient & put the patient in their nursing

home. This is in all nursing homes in St.

Joseph—All pharmacies are suffering, all

supply companies are suffering. Will you

please help us in St. Joseph. Please, please.

Beltone Knapp Hearing Aid Center

1150 South Belt Highway, St. Joseph, MO

64507, (816) 232–3386, FAX: (816) 232–4362

Sept. 29, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Antitrust Division, U.S. Dept. of Justice, 600

E. Street, N.W., Room 9300, Washington,

D.C. 20530

Re: Heartland Hospital Comments

Dear Gentlemen: On Sept. 24th, 1995 the

St. Joseph News-press ran an article on the

Heartland Hospital’s problem and potential

problems with both the federal and state

governments.

In this geographical area we have only one

hospital, and one physicians office that

specializes in problems of the ear. At least

one other ear specialist was purported to

have been forced out.

It is our understanding that any patient

who has any questions of possible hearing

problems is tested and if over 65 is billed to

medicare. If there is a loss, they are sold

hearing aids by the hospital. To our

knowledge they are not given a choice or

advised of the many immediate and long

term benefits of being fitted by a dispenser

other than the hospital.

If there is to be true competition than this

system needs some changes.

Sincerely,

Roger E. Knapp,

President.

October 4, 1995.

Gail Kursh,

Health Care Task Force, Department of

Justice, Antitrust Division, 600 E Street,

N.W., Room 9300, Washington, D.C.

20530

Dear Ms. Kursh: As an 18 year employee

of a Nursing Facility in St. Joseph Mo., I am

writing in regard to the Anti Trust Suit

against Heartland Health Systems in St.

Joseph.

In the 18 years that I have been at this

facility we have more vacancies as this time

than we have ever had. We feel it is still the

monopolization of Heartland. If we send a

patient to the hospital they are treated in the

acute hospital, transferred to extended care

for rehab, until their Medicare days are used.

Sometimes they are then transferred to the

Medicaid unit. The nursing homes in St.

Joseph all have rehab available and there

really isn’t any reason for patients to remain

in the Hospital for the length of time they are

kept. I believe it is abusing Medicare and

Medicaid as well as private insurance. This

did not happen in the past, only under the

present management.

They have bought the Drs. groups, this has

caused a trickle down effect in our city. It has

affected everyone in the Health Care

Industry. Heartland now has a 210 bed

nursing facility, when there are many

vacancies in the nursing homes in this area.

If you use the Doctors they have bought, you

use Heartlands Pharmacy, Laboratory, exray,

and supplies. This has even gone so far as to

hurt office supply businesses, as the Doctors

in the past have bought their office supplies

from the local businesses, now they buy

through Heartland.

As far as Nursing Homes go, we all have

vacancies and can’t see there was a need for

210 beds at Heartland. I understand they will

be adding an Alzhiemers Unit. There is a

total of 500 beds available, when these are

utilized, how many vacancies will we have

and how many homes will be forced to close.

We were of the opinion it was against the

law to have a monopoly. Heartland definitely

has a monopoly in St. Joseph.

We have written the Justice Department in

the past, as of this date we can see no

difference in Heartlands attempts to

monopolize the Health Care providers in

Buchanan County and Northwest Mo. Finally

the summary I read does not rectify the

monopoly Heartland already has. Doctors,

laboratories, pharmacies, long term care,

suppliers, and home health.

We remain optimistic that the anti-trust

department can help the providers in and

around our area.

Sincerely,

Dee Frye,

P.O. Box 1308, St. Joseph, MO 64502.

I am writing in reference to a newspaper

article concerning Heartland Health System

of St. Joseph, MO.

I have had quite a few bad dealings with

the doctors in St. Joseph and Heartland

Health System and Physician’s acute care

services—which are affiliated with

Heartland.

Our insurance provider is Health Net,

which my husband carries through his

employer.

I have seen numerous instances of poor

patient care, medical negligence, misdiagnosis and probable medical malpractice.

Over-billing of patient accounts and trying to

get more money out of the patient, than the

insurance says we have to pay.

Another area you may want to check into

is the med-clinic which is a doctor-owned

clinic in St. Joseph.

Patients who have went to the clinic for a

problem are given inaccurate lab results and

inaccurate diagnosis and told to come back

to be rechecked again, and when these

patients go to their regular doctor there is

nothing wrong with them.

I live 25 miles north of St. Joseph, and my

family drives 70+ miles to use a hospital in

Kansas City. The care is so bad at Heartland,

I wouldn’t take a dog there. I hope we never

have a life threatening emergency—they

probably wouldn’t make it to Kansas City,

but they would be better off, than going to

Heartland.

Sincerely,

Alona S. Miller,

20421 County Road 223, Union Star, MO

64494.

October 3, 1995.

Professions and Intellectual Property Section,

Health Care, Task Force,

Anti Trust Division, U.S. Department of

Justice, 600 E Street N.W., Room 9300,

Washington, D.C. 20530

Attention: Gail Kursh, Chief

Dear Ms. Kursh: Recently in the St. Joseph

Newspress the article on HEARTLAND

HOSPITAL, St. Joseph, Missouri pertaining

to the anti-trust suit that is pending against

them.

You might find it very interesting to the

treatment that a local doctor * * * Dr.

Charles Willman received from them. He

filed law suits again the hospital and some

doctors but was unable to get by the Judge

Bartlett in Kansas City and also unable to be

heard in Jefferson City, Missouri. Dr.

Willman was a very fine surgeon and was my

person doctor. They refused him practice at

the hospital and you might find it very

helpful if you investigated this case.

Dr. Willman gave up his practice and now

lives in Springfield, Missouri due to financial

reasons.
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29809

Sincerely yours,

Joy Schiesl,

Five Lindenwood Lane, St. Joseph, Missouri

64505.

Bender’s Total Home Health Care

3829 Frederick Avenue, St. Joseph, Missouri

64506, 816/279–1668, 800/633–9781, Fax

816/279–6425

Gail Kursch,

Dept. of Justice, Antitrust Division, 600 E

Street NW, Room 9300, Washington, DC

20530

This is to make you aware of a grave

concern we and others (providers and

patients) have regarding the new Referral

Policy of Heartland Health Systems. That

policy, as stated in the proposed Final

Judgment against Heartland Health Systems,

HealthChoice of Northwest Missouri and St.

Joseph Physicians Inc. by the U.S. Justice

Dept., has clearly been developed to serve the

best interests of Heartland and its

subsidiaries, and certainly not the best

interests of patients. Not only are patients

unlikely to be given an equal, unbiased

choice of providers, the new policy

guarantees that patients will not be given

unbiased information or assistance with

which to make necessary decisions.

There are several reputable providers of

home health care, hospice, home medical

equipment, oxygen and outpatient

rehabilitation services serving St. Joseph and

the surrounding area. In an effort to achieve

total vertical integration, Heartland has

created subsidiaries to fill each of these

ancillary services. In doing so, Heartland has

become a direct competitor with each of the

independent providers for whom Heartland

is the primary referral source. To further

control referrals, Heartland also now ‘‘owns’’

an HMO, an managed care agency and

several physicians’ practices.

While being ripe for abuse, this situation

is not of itself necessarily harmful to

independent providers nor to patients.

Actually, we contend that fair competition

encourages providers to improve the service

they render and to hold down costs, which

ultimately benefits consumers. However, the

procedures which Heartland’s discharge

planners have been ordered to follow are

harmful to the ultimate consumer good by

preventing fair competition.

The previous referral policy was that every

patient for whom ancillary services were

ordered would be made aware of all area

providers of the required service(s) in an

unbiased way. Should a patient have

questions about any of these, the discharge

planner, working on the patient’s behalf,

would seek accurate information. This

policy, if followed, would foster fair

competition; would encourage providers to

compete based on merit, not artificial barriers

or deal-making; and most importantly, would

benefit patients.

The new policy states that if a patient does

not express a preference of provider, the

discharge planner shall make a sales pitch for

Heartland’s own service. If the patient does

not accept Heartland’s Ancillary Service or

asks what other providers are available, they

shall be told to look in the telephone book.

Only if the patient asks again for information

on other providers are the referring personnel

to verbally (not in writing) identify the

independent providers that can serve the

patient’s needs. At no time is the discharge

planner to act on the patient’s behalf by

providing impartial information that would

facilitate the patient choosing one of

Heartland’s competitors.

Obviously, this new policy blatantly

prevents free, informed patient choice by

denying equal access to information.

Discharge planners who should be impartial

patient advocates are turned into agents for

heartland’s ancillary services. No other

provider is allowed to put literature into the

hands of patients. No other provider is

allowed access to patient charts. No other

provider’s capabilities can even be outlined

to patients and families who could benefit

from their service.

We do not expect each independent

provider to be allowed to walk the halls

‘‘fishing’’ for patients or to give an aggressive

sales pitch to every patient that is admitted.

What is expected is fairness. Equal access to

accurate information by patients and

impartial efforts by those who are supposed

to be assigned (and allowed) to serve the best

interests of the patient—not those of

Heartland. Heartland’s Ancillary Services

should be treated no better or worse than any

other provider, but should compete for the

opportunity to serve the needs of the patient

based upon merit. Give the patients equal,

unbiased information and impartial

assistance and let them choose.

We have no complaint against hospital

personnel, in fact most with whom we have

had dealings over recent years (as patients

and as a provider of products/services) have

been extremely efficient and helpful. Our

concern is with the new policy which, not

only threatens the viability of independent

businesses, but betrays the trust of

unsuspecting patients who assume that their

interests are being handled by impartial

sources.

Mark L. Wyble,

Coordinator, Patient & Community Relations.

October 9, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force, Antitrust Division, U.S. Department of

Justice, 600 E Street, N.W., Room 9300,

Washington, D.C 20530

Dear Gail Kursh: I recently saw an article

in the St. Joseph newspaper indicating that

the Justice Department was accepting written

comments on the proposed consent decree

concerning Heartland, Health Choice and St.

Joseph Physicians, Inc.

What I cannot understand is how

Heartland Health Systems, the parent of all

these organizations, and supposedly a nonprofit organization, can contribute over three

million dollars to the purchase and

development of land for an industrial park in

St. Joseph.

If Heartland Health Systems has that much

extra money to throw around then whatever

they are doing must be a real serious

violation of the anti-trust laws and should

require more serious penalties than the slap

on the wrist they are receiving in the consent

decree.

A concerned citizen of St. Joseph, Missouri

Coalition for Quality Healthcare

October 10, 1995.

To all who have been affected by

Heartland’s business practices, both

providers and patients:

We are a group of business professionals

and citizens concerned about the fairness in

the healthcare market in St. Joseph.

We Want Our Voice To Be Heard

The Justice Department recently filed in

district court a ‘‘Final Judgment’’, which,

according to the competitive impact

statement filed with it ‘‘* * * will restore the

benefits of free and open competition in St.

Joseph and will provide consumers with a

broader selection of competitive health care

plans.’’

The Coalition for Quality Healthcare, and

other concerned citizens, want you to

become familiar with the ‘‘proposed Final

Judgment.’’ The United States District Court

for the Western District of Missouri has filed

this civil action suit against Heartland Health

Systems, Health Choice of Northwest

Missouri, Inc., and Physicians, Inc., on

September 13, 1995. After 60 days,

(November 13, 1995) this Final Judgment will

be entered into court. Once finalized, no

changes will be allowed into the decree for

a 5-year period. We believe that the proposed

final judgment should be modified and

clarified before it has been filed and entered

by the court.

Appropriate steps are needed to ensure

equal access and to foster patient care. In

order to ensure equal access to available

services provided by many sources other

than Heartland, as well as adequate patient

choice in obtaining those services, we believe

that certain restrictions need to apply to

Heartland Health Systems. These restrictions

would serve to foster and support cost

reduction through total market competition,

and should include the following:

• Strengthen limitations on the hospital’s

ability to refer its patients to its own hospitalbased components.

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers in the area. A legislated rotation

system would guarantee that hospital staff

could not unfairly influence hospitalized

patients in the selection of necessary

providers and would provide a means of

accountability.

• Require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and to

expose the patient population to the

availability of outside services as well.

• In order to ensure compliance with the

above, make the hospital post, for public

examination, their daily referrals to both

their hospital-based component and to other

providers in the community.

Situation

It is time we made the hospital accountable

for their actions! They say they have a
29810 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

referral policy, and they follow it * * * let’s

make them abide by it. Hospitals who exceed

30% of referrals to their own components,

should be subject to a fine.

Recommendation

We recommend that violators be fined

$50,000 per day.

What We Would Like To See

First and foremost, we would like to see

the patients offered informed consent and the

right to choose. We feel that all people need

to be educated on this fact.

As a provider, your business may be

adversely affected by Heartland’s use of its

monopoly power. As a patient at Heartland,

you may have been ‘‘coerced’’ into using a

Heartland based component, disregarding

‘‘Your Right to Choose’’.

Please join us for an informative meeting:

Who: The Coalition for Quality Healthcare

When: Tuesday, October 17 &/or Thursday,

October 19

Where: Stan’s Golden Grill

Time: 6:30

It is only necessary to attend one of these

meetings. We wanted to create an option in

an effort to accommodate everyone’s busy

schedule. We will make every attempt to

contain these meetings to approximately 11⁄2

hours.

RSVP your attendance today to: 279–5393.

Our goal is to submit to the United States

District Court for the Western District of

Missouri our recommendations to amend the

‘‘Final Judgment’’. We as a group of

professional healthcare providers and

concerned citizens, must take this stand now,

or abide by the decree that will be enforced

as of November 13, 1995. Together, we CAN

make a difference.

Questions? Call 279–5393.

Sincerely,

The Coalition for Quality Healthcare

Citadel Health Care

5026 Faraon Street, St. Joseph, MO 64506,

(816) 279–1591, Fax (816) 232–3775

October 3, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, Room 9300, Washington,

D.C. 20530

Dear Ms. Kursh: We are a small 100-bed

skilled nursing home sitting in the shadows

of Heartland Hospital of St. Joseph, Missouri.

By doing a good job in all respects, we have

been able to survive. But being a neighbor to

an octopus, when the octopus is trying to eat

you every day, is no fun.

The ‘‘Final Judgement’’ filed with the

district court falls far short of creating a level

playing field. Heartland conducted an

elaborate building campaign and vastly

expanded it’s new ‘‘campus’’, then had it’s

older facility left mostly vacant. Being good

business persons, they chose to convert that

hospital structure into a skilled nursing

home, directly affecting 400 other long term

care beds operated by private entities.

Heartland’s intrusion into the market added

a 50% increase in nursing home beds in a

state where a certificate of need is/was

required, except that they used political

influence to circumvent the certificate of

need laws to be our monster competitor.

Does Heartland refer persons to our

nursing home? Fat chance! They raid our

census every time we have someone that

becomes ill enough to need hospital or

rehabilitation treatments. If those residents

leave us, and they either have Medicare

available coverage, or have private insurance,

or are lucky enough to be financially secure,

they never come back to us. They or their

families are ‘‘sold the Heartland philosophy’’

(that Heartland can do more than any other

nursing home, and do it so much better that

nobody should ever leave Heartland’s sphere

of care). We have four such cases just in the

month of September 1995, and know that

those people will not be back until they are

indigent, at which time Heartland will dump

them like the next load of garbage, back to

a nursing home.

Or if the person makes significant recovery,

Heartland refers everyone possible to it’s

wholly owned ‘‘Heartland Home Health

Care’’, which looks like it is just about to

force all three other home-care businesses out

of business. This seems grossly unfair,

considering that again Heartland is the ‘‘new

kid on the block’’. The other home care

agencies were in business long before

Heartland entered that market.

Is it coincidence that Heartland is thriving

and all other health care businesses in the

area are struggling for survival? Not hardly.

Heartland has already bought approximately

80% of all the available physician services in

the area. And if the doctor wants to keep his

job (not his practice—just his job), he will do

as Heartland directs.

In the long term care industry, survival

depends upon a facility’s relationship

between local physicians and the hospital.

Where does that leave every long term care

provider in St. Joseph? Answer: 1) Competing

for patients with the hospital; 2) Depending

upon referrals by doctors that are employees

of Heartland, operating medical practices that

are owned by Heartland. If a potential

nursing home admission is first seen at the

hospital, if there is room in Heartland’s

facility and there is a way to induce the

family to stay there, that is what happens. If

the potential admission is seen in one of

Heartland’s medical practices (and they own

approx. 80% of all the providers in the area),

the Heartland provider is certainly referring

potential clients to Heartland’s nursing

center.

If when the managed care capitation

occurs, Heartland will now be in a position

to absolutely bankrupt all the other nursing

facilities in the area because they have a

large, former hospital to expand into. They

can bid services below their competitor’s cost

of staying in business because of their

competitive advantage * * * an advantage

based upon monopolistic principles of

eliminating competition.

It is relevant to note that Heartland’s per

diem rate is approximately 25% higher than

other competitive nursing homes here, they

are 95% filled with private paying residents,

and the composite private pay census of all

other homes in this area is approximately

25%. Heartland has staff persons whose

responsibility is to recruit from the hospital

to fill their nursing home with private paying

persons. Nobody else in this area has access

to walk the halls of the hospitals to recruit

persons in need, and have the ‘‘closed

market’’ already captured.

We know that Heartland has spent huge

sums of money defending its right to acquire

and operate all of the health care industry in

a large area of northwest Missouri. Unless

something is done in the near term future,

they will squeeze their smaller counterparts

like a huge python kills its prey. And when

there is no life left, Heartland will swallow

the remains.

When the competition is gone, so will be

all ability to make independent health care

choices, and so will go the availability of

services to the masses. Heartland is

flourishing because it already has captured

the private pay market that can and does pay

market rates. The rest of us must accept

public assistance patients, or not accept any

at all. Heartland gets all the private pay

clientele, not because they necessarily

provide better product, but because it’s

hospital has first access to those folks. If they

were not sold a ‘‘bill of goods’’, why else

would someone opt to pay 25% premium for

services in a hospital-converted nursing

home when they could have a much homier

accommodation in some of this city’s nursing

facilities? Unfair competitive advantage!

Please do not turn your backs on the

providers that took care of this community

before Heartland became a megopoly. Those

providers all survived and provided good

service until the hospital pushed them aside.

Given any kind of equal opportunity access

patients, those facilities can still compete. It

is the lack of access, due to Heartland’s

vertical integration, that threatens the

livelihood of the other health care businesses

in this area.

Thanking you in advance for any

assistance you may provide, I remain.

Sincerely,

Lowel Fox,

Administrator.

October 11, 1995.

Ms. Gail Kirch

Health Care Task Force, U.S. Dept. of Justice,

600 E St., NW., Room 9300, Washington,

DC 20530

Dear Ms. Kirch: Regarding Heartland

Health System and St. Joseph Physicians Inc.

in St. Joseph, MO. I prefer to go the a doctor

of my choice and a hospital of my choice. I

have gone out of St. Joseph for years and

hope to continue to do so.

Heartland Health, under Lowell Kruse, has

been attempting to ‘‘keep everyone in the

area’’ for years. There needs to be a full scale

investigation.

Sincerely,

Evelyn W. Nask,

2720 Francis, St. Joseph, MO 64501.

October 8, 1995.

Dear Ms. Kursch, Chief, Professions &

Intellectual Health Care Task Force: I wish to

comment on your proposed consent decree

concerning Heartland, Health Choice and St.

Joseph Physicians Inc. in St. Joseph.
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29811

It is not my desire to have my choice of

doctor(s) and hospital eliminated. If I choose

to go outside Heartland Health System for

medical treatment I want that to be a viable

option for me.

It appears Mr. Lowell Kruse and Heartland

Health System are attempting to create a

monopoly in N.W. Missouri, thereby running

competitors out of business.

There needs to be a large scale

investigation (without warning) of this entire

system. I also think the doctor should be in

charge of the patient, not the administrator

on the insurance company.

Sincerely,

Ruth Serrells,

2730 Felix St., St. Joseph, MO 64501.

cc:

State of Missouri, Attorney General’s

Office, Attn: Mr. Gary Kraus, Superior

Court, Box 899, Jefferson City, MO 65102

November 4, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street NW., Rm. 9300, Washington,

DC 20530

Dear Ms. Kursh: This is an explanation of

how I feel Heartland’s policy and

competition has affected my business over

the last few years and how it will affect me

in the future if strict guidelines are not put

into place.

Heartland is competing with me directly

for my nursing home patients and for my

regular customers as though they were a

standard business competing for profits.

Competition is good and will always be the

best system to keep all of the business

community on the leading edge of giving the

patients the best quality care they can

possibly receive. As a ‘‘for profit’’ business,

I must pay taxes and incur expenses in the

day-to-day activities that control how I do

business. Heartland, on the other hand, is

competing directly for my patients and other

laboratory, home health, and hospice care,

etc. that they want to control, on a non-profit

basis * * * How is that possible? Their

desires and efforts are towards controlling all

aspects of healthcare in the entire Northwest

Missouri area.

My business has decreased two-fold in the

nursing home area. One is in direct

competition for my customers in the homes

and secondly through Heartland’s in-house

referral policy. When a patient is admitted

into Heartland Hospital from a nursing home,

they are ‘‘captured’’ into Heartland’s system.

When these patients are discharged, they are,

on many occasions, discharged into

Heartland’s skilled or intermediate care

facility and are then serviced by Heartland’s

own pharmacy. As you research past history

you will see Heartland has already been in

trouble for not giving their patients a real

choice in their Heartland Centre facility. As

a matter of fact, Heartland used to make their

long-term care center patients sign a

statement that they would only get their

pharmaceuticals through the Heartland

pharmacy. It has only been recently, (within

the last two or three years) that Heartland

was forced by Medicare to allow other

pharmacies into their nursing home setting.

At that time, Heartland officials sent a letter

to their patients which lead the patient and

families to believe that if they didn’t use

Heartland’s own pharmacy, Heartland could

not guarantee the quality of service they

would receive. This is a very scary thought

to these elderly patients and their families. It

is also a statement that could not be further

from the truth. Given this ‘‘threat’’, does the

patient really have a choice in pharmacy?

My total prescription volume, down by

20% in the last two years, is partially due to

Heartland’s policy to discount their

prescription ‘‘copay’’ to all their employees

for the purpose of increasing the volume of

their new pharmacy. Even if we could afford

to do this (reimbursement for our services by

the Heartland HMO does not leave room for

any more discounts) our contract with the

claims processor makes discounts an unfair

business practice. It should also be noted that

Heartland, because of their position as a

hospital and now an HMO, receive deep

discounts on prescription drugs. Sometimes

Heartland may pay as much as 80% less for

the same pharmaceuticals that I buy at

wholesale prices. This constitutes another

aspect of unfair competition. There is no way

I can cut my prices to adequately compete

when I have to pay so much more for the

same items. Several years ago Heartland had

another pharmacy which tried to compete

with existing pharmacies and could not make

it on standard competition. Needless to say,

Heartland has found this ‘‘unfair’’

competition much more lucrative.

Jake’s also does not receive any referrals of

patients as they leave the hospital and have

needs for walkers, canes, crutches,

wheelchairs, commodes and numerous other

healthcare necessities for recuperation at

home. This is an area I know all to well. I

used to own a business that worked

exclusively in home care supplies and fell to

Heartland’s unfair and unprofessional

business practices. After building a quality

business, having a past, non-exclusive,

service contract with Heartland, and a letter

of intent for continuation of this contract

along with increased equipment needs

forcing a large expenditure on my part,

Heartland began doing business with another

company without notice. This forced me into

a sale situation which was less than

desirable.

My major concern is for the patient’s

overall healthcare. Competition is what keeps

hospitals, pharmacies, hospices, and other

healthcare services accountable to the general

public and each individual consumer.

Competition encourages business to be the

best that it can be. St. Joseph has only one

hospital. The public is not able to compare

Heartland’s services to another hospital and

choose the one which best provides for their

specific needs. The new Heartland HMO

seals the fate of true competition, not

allowing for any choice what-so-ever in

hospital services. If competition is further

impeded, if Heartland is allowed to go

forward with their plans without strict

checks and balances, who benefits except the

pocketbook of Heartland? If these other

services, represented by many companies, are

allowed to fall by the wayside, who will be

able to hold Heartland accountable? What

guarantees will be in place that will make

sure the patient’s welfare and comfort are the

driving force of healthcare decisions? I am

deeply concerned that without the variety of

businesses now involved in the many areas

of healthcare in the St. Joseph community,

Heartland will have a ‘‘captive audience’’. It

will not make decisions based on what is best

for the patient, but will judge a patient’s

healthcare treatment by money saved * * *

by profit generated.

You have the power to ensure that fair

competition exists in the St. Joseph

community. It is within your power to ensure

that Heartland’s domain is not allowed to

continue to snowball and over-run its

competitors. Unfortunately, if nothing is

done to strictly control Heartland, by the

time it is realized that lack of competition

breeds apathy and poor service, the

competitors will be gone.

In closing, I want to thank you for the

opportunity to speak to these issues. I hope

you are able to see the crisis faced by myself

and my colleagues. If I can be of further

assistance, please feel free to contact me at

the address and phone number listed below.

Sincerely,

Richard C. Bosworth,

Coalition of Quality Health Care, 2318 N Belt

Hwy., St. Joseph, MO 64506.

Armstrong, Teasdale, Schlafly & Davis

Attorneys and Counselors

1700 City Center Square, 1100 Main Street,

Kansas City, Missouri 64105, (816) 221–3420,

Fax (816) 221–0786

November 13, 1995.

Edward D. Eliasberg, Jr.,

Antitrust Division, U.S. Dept. of Justice, 600

E. Street, N.W., Room 9420, BICN Bldg.,

Washington, D.C. 20530

Re: U.S. v. Health Choice of Northwest

Missouri, et al., Civil Action No. 95–

6171–CV–SJ–6, Pending in U.S. District

Court, Western District of Missouri

Dear Mr. Eliasberg: This office represents

The Coalition for Quality Healthcare, a

Missouri non-profit corporation made up of

businesses in the St. Joseph and northwest

Missouri area who provide ancillary

healthcare services to the public. In

connection with our representation, we are

preparing to respond to the proposed Final

Judgment in the above matter.

We obtained a copy of the proposed Final

Judgment (consent decree), Stipulation,

Complaint and Competitive Impact

Statement from the district court. We were

informed by the district court that no

‘‘determinative’’ materials or documents

called for by § 16(d) of the Tunney Act were

filed with the court. We also called your

Department to request those documents or

materials and were told that none exist in

this case.

Section VII of the filed Competitive Impact

Statement recites that ‘‘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.’’ In light of the fact that this suit
29812 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

resulted from a multi-year investigation by

your Department, during which

administrative depositions were taken and

documents produced by defendants, it seems

improbable under the circumstances that no

documents exist which your office

considered determinative in drafting the

proposed consent decree.

This very issue was taken up by the district

court in United States v. Central Contracting

Co., Inc., 537 F.Supp. 571 (1982). In Central

Contracting, in response to a request for

materials called for by the Tunney Act, the

Department of Justice asserted that ‘‘there

were simply no documents or materials

* * * that contributed materially to the

formulation of the proposed relief.’’ Id. at

573. The Court found the government’s

assertion disingenuous in light of the

government’s similar claims in 172 out of 188

prior cases that it considered neither

documents nor any materials determinative.

Id. at 577. The Court refused to blandly (and

blindly) accept the government’s certification

that no documents or materials led to the

government’s determination that it should

enter into a consent decree. Id. at 575. Rather,

the Tunney Act required a ‘‘good faith review

of all pertinent documents and materials and

a disclosure’’ of those materials called for by

the Act. Id. at 577.

We hereby request on behalf of The

Coalition for Quality Healthcare that the

United States produce to this office and file

with the U.S. District Court for the Western

District of Missouri a list of any materials and

documents which the United States

considered ‘‘determinative’’ in formulating

the proposed Final Judgment, so that we or

any members of the public may request

copies of specific documents from your

Department.

I look forward to your prompt response to

this request.

Very truly yours,

Thomas M. Bradshaw, P.C.

TMB:kag

cc: Ms. Kristin Helsel, President, Coalition

for Quality Healthcare

Glenn Davis, Esq.

Heritage Home Health

Central Office: 169 Daniel Webster Hwy.,

Suite 7, Meredith, NH 03253, 603–279–4700,

Fax 279–1370

Branch Office: 500 Commercial St., Unit

302B, Manchester, NH 03101, 603–669–5700,

Fax 669–5755

November 14, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, NW, Room 9300,

Washington, DC 20530

Re: DOJ’s recommended home health, DME

and hospice referral policy for Heartland

Hospital

Dear Chief Kursh: I read with interest an

article that appeared in . . . home health

line, November 13, 1995, Vol. XX, No. 43,

that referenced the above mentioned policy.

Please take a moment to consider the

following:

(1) The main source of referrals for home

health services come from hospitals. The vast

majority of consumers of home health

services are patients discharged from

hospitals in need of follow-up care.

(2) Free standing home health agencies can

not reasonably duplicate such a facility

(hospital).

(3) Free standing Medicare certified home

health agencies are inspected according to

the same federal regulations as hospital based

home health agencies. There are no

requirements or need for further

‘‘independent review or evaluation’’ by the

hospital.

(4) Vertical integration and monopolizing

of referrals can and will not serve long term

cost containment.

(5) Medicare beneficiaries should be

offered a list of all participating Medicare

providers when they are in need of services.

(6) Hospitals should have discharge

planners that are not affiliated with any

home health agency, including the hospital

based home health agency. Referrals could

then be made to the best provider for the

given circumstances. Often times, even

though the hospital based agency can not

properly service a patient, the referral is

given to them, only to have the patient left

without service entirely or on their own to

locate another provider. Hospitals are

reimbursed for offering discharge planing to

their patients to locate the best possible

scenario of services for that patient and to

ensure that persons’ discharge is a safe and

successful one. In the current environment,

however, discharge planners are fast

becoming ‘‘casefinders’’ for Hospital based

home health agencies.

(7) Hospital discharge planners often refer

patients to other types of Ancillary services,

that they are not affiliated with, when the

hospital does not own facilities or agencies

offering that type of service without doing an

independent review or evaluation. For

example, a referral to a skilled nursing, sub

acute of rehabilitation facility.

(8) Hospitals are no longer the community

providers they once were. They take the

homes of people who owe them money. They

employ attorneys, accountants, MBA’s, image

consultants and more. They advertise. Health

care is a business. Hospitals are profiting

from that business. They should not be

allowed to continue unchecked.

Thank you for your consideration.

Sincerely,

Carolyn A. Virtue,

Administrator.

MS&R—Medical Sales & Rentals

1411 Memorial, Bryan, Texas 77802, (409)

776–5555

November 14, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. Street, N.W. Room 9300,

Washington, DC 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6

The Coalition for Quality Healthcare is

correct. Heartland Hospital is taking away a

person’s freedom of choice. Allowing the

hospital to eliminate competition will

eventually lead to poor service and poor

quality of care. The independent

businessman is the backbone of this country

and that will be eliminated if the hospital is

allowed to keep referring their patients to

themselves.

Your recommended referral policy for

Heartland Hospital is not correct. It is ‘‘big

business’’ orientated and does not consider

the patient or the independent businessman.

A local hospital opened their own DME

company last year. Since that time two

independent companies have had to change

their day to day business strategies because

they no longer get referrals from the area’s

major hospital. We are fighting to stay in

business.

Please call me at 409–776–5555 if you

would like more opinions or viewpoints.

Sincerely,

Nathan L. Cook,

Owner/President.

HealthCare Personnel

Moorings Professional Building, Suite 407,

2335 Tamiami Trail No., Naples, FL 33940,

(941) 261–8700 FAX (941) 261–7206

November 15, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, AntiTrust

Division, 600 E St., N.W. Room 9300,

Washington, D.C. 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et. al. Case No.

95–6171–CV–SJ–6

Dear Ms. Kursh: The proposed final

judgment for U.S. v. Health Choice is a death

knell for quality care in the home health care

setting. Competition supports and promotes

a high quality of care, evidenced by clinical

outcomes, cost-effective clinical guidelines,

patient satisfaction and appropriate

utilization of community resources. Your

proposed judgment creates a monopoly for

hospital-based home health care agencies and

the end of competition in home health care.

Hospitals have a ‘‘captured audience’’ of

vulnerable patients who feel dependent upon

the hospital staff. Patients are not likely to

defy a discharge planner’s referral to the

hospital home health agency for fear that

their defiance would create an environment

where the patient’s continuing needs (inpatient needs and paperwork for

reimbursement needs) may not be met or may

be delayed.

Additionally, hospitals exert their

influence over physicians (with hospital

privileges) to refer only to the hospital-based

agency in order to support the hospital. Some

hospitals have even moved their home health

agency from being a separate entity to a

hospital department, so that self-referrals are

not subject to GAO investigations instituted

by Rep. Pete Stark (D-Calif.). A second reason

may be to shift administrative costs.

I have been in home health agency

administration for twenty years. In the past

two years I have seen hospitals discontinue
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29813

a referral rotation system, discontinue

hospital access to patients by agencies who

serve them, refer only to their own agency,

call physicians to ask why a hospital patient

was referred to an outside agency, and hide

all referral data and percentage of referrals to

hospital based or outside agencies. All these

practices reinforce a hospital-based home

health care monopoly.

Hospital arguments for promoting their

own agency at the exclusion of outside

agencies include continuum of care, referrals

to other agencies would require hospital

credentialing of outside agencies, and

hospitals always give the patient a choice. It

is easy to refute these claims.

The traditional continuum of care has

always been from organization to

organization, be it a hospital or other

community resource agency, with patient

information transferred between

professionals who are trained to focus on

continuity and coordination of care. Just

because a home health agency has the same

name or is affiliated with a hospital does not,

in itself, assure quality, continuity or

coordination of care. Continuum of care

actually is a reimbursement train for the

hospital, in the absence of their desired

hospital-based reimbursement bundling.

The responsibility of a discharge planner

includes knowledge and judgment regarding

all home health care community resources

that would benefit the patient. Traditionally,

in cities as large as Cleveland, Ohio and as

small as Naples, Florida, discharge planners

have always known resources available, and

have received feedback regarding the quality

of care from those agencies. Besides, state

home health agency licensure laws establish

standards that agencies must meet, so

hospitals should know that standards are met

and don’t need to ‘‘credential’’ them.

Finally, hospitals ALWAYS state they give

the patient a choice, yet many outside agency

patients have told outside agencies that

during their hospitalization, hospital

representatives have almost insisted they use

the hospital-based agency and demand to

know why the patient would NOT want to

use an affiliated agency. Also, physicians

who refer to outside agencies tell outside

agencies that as soon as the patient is

admitted, before the physician even

discusses discharge with the patient (to

advise them of the physician’s choice of

agency), the hospital-based agency has

already been in to talk with the patient and

already has them signed up as a referral for

their agency. The physician does not even

have a choice.

Thank you for the opportunity to send you

my comments on your proposed final

judgment for the above mentioned case.

Please don’t be persuaded by big hospital

corporations and hospital lobbyists to pass a

judgment that abolishes competition in home

health care and effectively gives patients no

choice and no recourse when a complete

monopoly occurs.

Sincerely,

Greg Eggland,

Director.

Health Personnel Incorporated

1110 Chartiers Avenue, McKees Rocks, PA

15136–3642, (412) 331–1042, FAX: (412)

331–2774

November 16, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. St., N.W., Room 9300,

Washington, D.C. 20530

Dear Chief Kursh: After reading the article

that appeared in the 11/13/95 edition of

Home Health Line I feel it is necessary as a

free standing home health care agency to

comment on the Department of Justice’s

proposed referral policy for Heartland

Hospital. This policy will be precedent

setting for all hospitals across the nation and

fails to take into consideration a number of

things such as:

The main source of home health referrals

is hospitals and hospitals have a captive

referral source which cannot be duplicated in

any other way. Yet, they are a very expensive

source of home health care and often provide

a poorer quality of care. Hospitals pass

through some of their administrative and

general costs to their home health agencies

and get away with this ‘‘double dipping’’.

The cost of a visit is increased by passing

through costs of the hospital and this does

not help cost containment efforts.

Also, at least in this area of the country,

hospitals do not individualize their care.

They discharge patients from homecare

before they stabilize which sends them back

to the hospital and increases health care cost.

One way to stop this is to enforce

regulations: Freestanding agencies must meet

the same certification and/or licensure

standards as hospital agencies. Therefore,

hospitals should have a rotating list which

assures equitable referrals to all qualified

providers (one that meet Medicare

certification (licensure) standards and have

the necessary services). The hospital should

have to make their percentage of referrals

public knowledge to each agency.

The discharge planner should offer a list of

all participating Medicare providers in the

service area and the discharge planner

should have no affiliation with any agency.

By the way, hospitals often cannot service

the patient adequately and so the patient is

left without care, i.e. a physical therapist is

not available to see the patient in a timely

manner (four weeks later a physical therapist

is starting to see the patient). No home health

aide is available so the hospital agency tells

the patient that they do not qualify for a

home health aide. (For example, the patient

has a fractured arm and myocardial

infarction but, does not qualify for an aide?)

Although, your policy puts the physician

back in control, it fails to take into

consideration the fact that here in Pittsburgh,

if doctors refer to another entity outside the

hospital, the hospital can revoke their

privileges. (This is happening in Pittsburgh.)

You need to write the settlement so that

hospitals cannot retaliate or put pressure on

the doctor to refer to their agency.

Referring the patient to the phone book is

inappropriate as the patient cannot tell

which providers can give the kind of care

they need or who is Medicare certified. Also,

the list of other providers needs to be written

as sick or well people, cannot remember

many, if any, names and they need the phone

numbers.

This issue covers more than the antitrust

issue you seem to be addressing. The

settlement fails to address the Anti-kickback

Law which prohibits hospital doctors

(doctors paid by the hospital) from referring

to a hospital owned agency and the Stark II

Law. According to these laws, no agency can

receive referrals from any physician who has

been paid more than $24,999.00 by that

agency. If a hospital or doctor owns more

than a 5% financial interest in an agency,

they cannot self refer.

Health Personnel, Inc. has tried to address

these issues with HCFA since 1986 and no

one has been able to resolve these problems.

In addition, the American Federation of

Home Health Agencies has had discussions

with Mr. Thomas Hoyer at HCFA in

Baltimore regarding the patient choice issue.

I hope you will resolve these problems and

legal questions.

Sincerely,

Phyllis W. Fredland,

Director of Nursing.

Home Health Specialists

November 16, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force, Dept. of

Justice, Antitrust Div., Washington, D.C.

20530

Dear Ms. Kursh: I have recently read the

D.O.J., proposed referral policy for home

health, DME and hospice for Heartland

Hospital. I personally find this totally absurb.

If this proposal passes it not only will affect

the freestanding home health industry, but

will also affect a patient’s right to choose,

even though the bill offers some small

reference to freedom of choice. The

government reports that Medicare will be

broke by the year 2007, and then a bill such

as this is recommended for hospital based

agencies. Evidently there has been no

investigation of the cost of hospital based

agencies versus freestanding agencies for

patient care and supply reimbursement. To

allow a hospital to elaborate on their agency

and state that they know nothing of the other

agencies in town is absurb, when we all

know that being a discharge planner, they

have had some dealings with the other

agencies in their area. Freestanding agencies

have received a bad deal, since the beginning

of hospital agencies when it comes to

referrals and this will only make it worse. We

provide the same quality and conservative

care that they state they provide and at a

lower cost. As it stands right now in our area,

we are not allowed to place brochures in our

hospital, visit our former patients, because

that is considered solicitation by the hospital,

and we are not allowed to view the

admittance and discharge rooster. This only
29814 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

started when they opened there own agency.

A rotation of referrals would give everyone

a fair chance to provide the care for the

patients that we should all strive for. This

would stop the hospitals attempting to

monopolize the health care industry and

could possibly reduce the legal and judicial

fees that are being used due to law suits over

the monopolizing of care. The posting of

referrals would then allow the freestanding

agencies to view how referrals are given and

provide some insight into the qualifications

and professionalism of the discharge

planners, who in some instances are placed

in the hospitals by competing home health

agencies. If the bill is passed as the D.O.J.

recommends, you will see slowly the fading

away of freestanding home health companies

the provide a large number of jobs to people

in our area. I hope that the people reviewing

this proposed policy really know the impact

that this will have on the health care industry

and take into consideration that it is hard

enough now for freestanding agencies to

receive referrals from hospitals, knowing

fully well the discharge planners are not

playing by the regulations that are in

existence now, and this would make it easier

to violate regulations, while at the same time

allowing an industry of freestanding ag to die

away. Please, for all the freestanding agencies

that are in existence please review this

referral policy closely and make discharge

planners to rotate referrals as well as make

available to home health agencies the list of

the referral list.

Sincerely,

Donna Isabell,

Administrator/President, Home Health

Specialists, Inc.

November 6, 1995.

Dear Gail: My name is Kathy Smith. I read

an article in the St. Joe newspaper on Sept.

24, ’95 concerning Heartland Health System.

This article really hit home with me. This

hospital, or so called hospital, has ruined my

life. Let me tell you my story.

I broke my ankle on April 12th of this year.

I was taken to the hospital by some friends.

(My husband works the late shift so he met

us at the hospital later.) I waited in the

emergency room for one hour and 45

minutes. In that time, no one came out to

check on me. I finally had my husband go ask

a nurse for a blanket. My body was beginning

to shake. I imagine shock was starting to set

in.

Finally I get back to E.R. and am taken on

to X-ray and I wait some more for a doctor

to come and set my foot. I find out I need

surgery. They will do it tomorrow (April 13).

I leave E.R., its after 2:00 in the morning.

Surgery is done the next afternoon. All

went well, or so I am told. I get released on

the 14th & I go home.

Now, you have to understand, I’m 33 years

old, and am married and have two small

boys, ages 3 and 5. I’m walking or hoppling

around with a walker, can’t fix supper, can’t

do all the chores around the house, that I

used too. This hurts, I’ve never had to

depend on other people. But I figured, I’ll be

up and around in 6 to 8 weeks, just like the

doctor had stated. End of story? I wish, it’s

only the beginning!

One week after the 1st surgery in April, I

came down with a high fever of 103 degrees,

then the chills, and nausea. I called my

doctor, he wasn’t in. I told the nurse, or the

secretary or whoever, and they said they

would get a hold of him and have him call

me. He did, about 45 minutes later. I told him

all the symptoms, and do you know what he

said, I must be coming down with a cold or

maybe the flu. Take some Tylenol.

I went back to the doctor, every week for

the next month, then every 2 weeks for

awhile. I had a place on my ankle that wasn’t

healing. He (the doctor) would squeeze on

my leg and say that was fat draining out. He

even brought in a colleague, and they both

agreed that was what it was. (No not once in

his office did he wear rubber gloves when he

touched my ankle (leg).)

Finally after about a month, he decided to

put me on antibiotics (actually he gave me a

choice, go in the hospital or take antibiotics.)

Now, when you have a family that depends

on you, what choice if any would you have

taken? So I took antibiotics. Even when I

went back to see this doctor (on antibiotics)

he’d continue to squeeze on my leg, and it

(puss) would just ooze out and one time he

mentioned, maybe it is a blood clot.

We are in June now, the 5th. He decides

he’d better go in and take the plate and

screws out. It’s June 7th, he took the

hardware out. The infection had eaten my

flesh away, and some bone along with it.

Actually it had spread into my bone. Now I

have osteomyelitis (a bone disease). I thought

I was going to lose my whole foot & part of

my leg! Where did they get this doctor from?

I had a lot of unanswered questions? I was

worried, I was in pain and I was scared.

Two days later, I got another visit from

another doctor he wants to put a groshong

catheter in my chest. Why? I ask. I needed

to be on vancomycin (one of the strongest

antibiotics used to control osteomyelitis.) I

have that surgery on June 9th. The doctor

assured me I wouldn’t feel a thing. I was to

be given a local to deaden my chest area.

Well, the local didn’t work. I was awake

through 3⁄4 of the operation talking with the

doctor & the nurses. Have you ever heard of

a doctor going through with an operation

when the patient was awake? I could feel

those tubes running down to my heart. It did

hurt but I tried to be strong & not let the pain

get to me too bad.

The first doctor, he called in a plastic

surgeon. He was to try to fill in this hole in

my leg (that hole was left by the first doctor

after he took plate & screws out, where the

flesh had rotted away.) So the plastic

surgeon, cut a flap in the back of my leg to

fill in the original hole. It was done on June

13th. Then I laid in the hospital bed for a

week and couldn’t move. The 3rd doctor said

let’s keep our fingers crossed to make sure

this takes (skin graft).

Also the 3rd doctor said to me ‘‘if I were

in your shoes, or one of my family members,

I wouldn’t be real upset with doctor #1.’’ Can

you believe what he told me? I came so close

to losing my foot and he had the nerve to say

something so foolish!

On June 20th, the gal from the Heartland

Home Health Care came in and said, ‘‘We’ve

got you all signed up for H.H.C.’’ I wanted

to know why and she said ‘‘because you’ll

have a nurse come over & make sure you get

the vancomycin twice daily.’’ The nurse from

H.H.C. told me it was kinda expensive. They

had contacted my insurance co. and they

agreed to pay 80%. We had to pick up the

20%. I thought it (the price) couldn’t be real

bad. But I was wrong. Each bag of medicine

was $65.00. Thats $130.00 a day. I was on

this medicine from June 21st to August 24th.

The nurse came out almost weekly to draw

blood for tests. The 1st doctor told me I

wouldn’t be on it (vanco) for long. He was

wrong. I was dismissed from hospital June

21st.

There was no mention I could have gotten

another Home Health Care Provider, in fact

I was shocked to learn, other ones were out

there, & that they may have been cheaper. I

guess you could call me stupid, but after this

nightmare, I have really opened my eyes.

Each visit with a nurse was over $100.00.

These people must think we are made of

money. My husband is a welder, at a plant

here in town, and he doesn’t make alot of

money for 4 people to live on. We rent the

house we live & our fortunate to have 2nd

hand vehicles to drive. Our kids get hand me

down clothes.

So you see we don’t have a lot of money,

and Heartland doesn’t help when they have

such high prices for their services, and they

need to stop monopolizing the St. Joe area.

By the way, my 1st doctor told me after I

asked him a few times. (‘‘I had picked up the

stupid infection from the hospital from the

surgery.’’) Isn’t that a kick in the ass? Now,

we have all these hospital bills & doctor bills

to pay. And I have a scarred up leg to show

for it. And the doctors & hospital are getting

richer for their mistakes. If you know anyone

that could help me I would appreciate it!

Sincerely,

Kathy S. Smith.

October 17, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section/Health Care Task Force, AntiTrust Division, U.S. Department of

Justice, 600 E St., NW., Room 9300,

Washington, DC 20530

Re: Heartland Referral Policy—consent

decree page 13B–1

As a prior patient of Heartland Hospital,

choices in health care providers were not

given at the time of discharge.

I believe upon being admitted to the

hospital, information on all agencies should

be provided to all patients.

Being advised to check the phone directory

is not a logical solution.

Kathy S. Smith.

VIP Home Nursing & Rehabilitation Service,

Inc.

51 Century Boulevard, Suite 308, Nashville,

Tennessee 37214, (615) 883–9816, (800) 826–

8998

November 17, 1995.

Gail Kursh,
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29815

Chief, Professions & Intellectual Property

Section/Health Care Task, Dept. of

Justice, Antitrust Division, 600 E. Street,

N.W., Room 9300, Washington, DC

20503

Re: United States vs Health Care of

Northwest Missouri, Inc. Case No.: 95–

6171–CV–SJ–6

Chief Kursh: In response to the above case/

proposal, I would like to put some light on

this proposal as far as freestanding providers

are concerned.

Here in Middle Tennessee we feel like the

unwanted step-child as far as hospitals are

concerned.

Approximately ninety percent of the

hospitals, large and small, now have their

own in-house home care service.

We are told by the discharge planners:

1. We rotate our patients to assure

equitable referrals to all providers in the area.

This is hogwash! We have called on some

hospitals in the Middle Tennessee area for

over a year and still do not get patients from

a good portion of them. Or, if we do get a

patient, it is because the patient has

requested VIP (which has been overridden

before), or the patient may live in an outlying

area where the hospital home health cannot

service due to distance. (VIP has six offices

covering 22 counties.)

2. We have been told point blank that

unless the patient requests a certain homehealth agency, they will automatically be

placed with the hospital home health service.

3. We have seen instances where the

hospitals are referring patients to their home

health, without any input from the patient’s

physician. Sometimes the physicians get

upset over this issue, because in some cases

the hospital home health apparently doesn’t

provide the level of care that the physician

would like to see.

4. Some of the smaller hospitals in the area

have been in very poor financial condition.

These have been bought out by another

hospital that has an in-house home nursing

service. The physicians in the area were so

appreciative to be able to keep a hospital

open in their area, that we have been told by

the physicians that they will only use the

hospital’s in-house service because they feel

so indebted to the new hospital.

5. Another hospital in this area was in the

‘‘red’’ and due to close in three to six months.

A freestanding home nursing service

contracted with them to run a home health

service for them. The home nursing service,

to my understanding, paid the hospital

$3,000 a month to rent space (this is a very

small town). The home nursing service has

one of their own employees making rounds

to the patients up for discharge, to check

with them about their home health needs.

The home nursing service is signing up

patients left and right for their service. This

is considered fraud under Medicare rules.

Freestanding services are restricted by

Medicare of direct solicitation of patients!

Do you see where our frustrations are

coming from?

These in-house hospital home health

services do not need to be given any

additional power on referrals. They already

have a captive patient population.

Passing this proposal would be a true slapin-the-face for all freestanding providers of

home nursing. Instead of a few crumbs, the

step-children need a whole piece of the cake

for a change!

Please help us!

Best regards,

Kay Smith,

Director of Patient Services.

November 17, 1995.

Ms. Gail Kursh,

Professions & Intellectual Property Section/

Health Task Force, Dept. of Justice,

Antitrust Division, 600 E. St., N.W.,

Room 9300, Washington, D.C. 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6

Dear Gail: My comments on the above case

for hospital discharge planners are that the

hospital should provide the patient with a

list of area providers who handle that

patient’s needed service. The hospital should

have the right to have their own service listed

first, and give to the patient any material the

hospital has prepared for that service

organization.

The balance of the list should include, in

alphabetical order, all other service providers

who request to the hospital to be included on

the list. The list should not encompass an

area of more than 50 miles from the hospital.

The hospital should be allowed to print a

disclaimer that they cannot speak to the

quality of care the other listed providers

provide.

Thank you,

Michael W. Thomas,

4518 Forestwood Drive, Parma, Ohio 44134.

Our Lady of Mercy Medical Center

600 East 233rd Street, Bronx, New York

10466–2697, Phone: (718) 920–9000

November 16, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street; N.W., Room 9300,

Washington, DC 20530

Re: Case # 95–61–71–CV–SJ–6, United States

v. Health Choice of North West Missouri,

Inc. et. al.

Dear Chief Kursh: I want to applaud your

recommended Home Health, DME, and

hospital referral policy for Heartland

Hospital. It is appropriate that a hospital with

their own home health agency refer patients

to their own excellent, fully accredited

agency.

Our agency does not keep statistics but we

get frequent calls from patients when other

agencies do not visit them within 24 hours

of discharge from the Medical Center. It is

hard to recommend other agencies!

Thank you for your support of the

hospitals and their home health agencies.

Sincerely,

Rose M. Rosenberg,

DPS/Administrator, Home Health Agency,

(718) 920–9030.

Hill Country Health Services, Inc., dba Hill

Country Home Health

P.O. Box 909, Lampasas, Texas 76550, 512–

556–8293, Fax 512–556–3591

November 20, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. St.

N.W., Room 9300, Washington, D.C.

20530

Re: United States vs Health Choice,

Northwest Missouri, Inc., et al, Case No.

95–6171–CV–SJ–6, U.S. District Court,

Western Division of Missouri

Dear Ms. Kursh: I would like to comment

on the above case involving home health

referrals from hospitals. As the owner/

administrator of a free-standing home health

agency in Central Texas, we deal with

numerous hospitals and home health

patients.

In our service areas, we have encountered

hospital discharge planners participating in

self dealing by referring predominately to

hospital based home health agencies. The

patients are told ‘‘your doctor has ordered

home health and we will have a nurse out

to see you tomorrow.’’ These patients are not

given a choice of available agencies.

Many times, our former patients have

requested our agency because of particular

caregivers. They have been told by the

discharge planner that these care givers do

not work for us anymore, when in fact they

do still work for us.

I believe in competition but it is really hard

to compete against a monopoly.

In accordance to published Fraud Alerts

(see attached), it is against the law to offer

anything of value to induce a referral. If a

hospital supervisor tells a discharge planner

‘‘if you want to keep your job, you WILL refer

patients to our (hospital based) home health

agency’’, then I feel this violates the intent

and the letter of the law.

Your proposals in the aforementioned case

falls far short of ‘‘leveling the playing field’’.

I would like you to consider forcing hospitals

to do the following:

a. Allow patients to exercise their right of

freedom to choose their beneficiaries.

b. Allow non-hospital based providers to

visit their former patients in the hospital.

c. Where no provider is specified by the

physician or the patient, provide a list of

eligible providers in the area so that a patient

can exercise their right to choose their

provider.

d. Make sure that discharge planners are

not coerced by supervisors to violate

Medicare Antitrust, and the Federal Trade

Commission’s laws by doing self referrals in

order to keep their jobs.

Thank you for your attention to this matter

and I trust that the Justice Department will

rule in favor of all; the patients and those of

us that compete on the currently unlevel

playing field.
29816 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Sincerely,

Ron Julian,

Administrator.

Dennis O. Davidson, M.D.

A Member of Arkansas Family Care Network,

Arkansas Physician Management, Inc.

2000 Harrison St., Suite D, Batesville, AR

72501

Mailing Address: P.O. Drawer G, Batesville,

AR 72503

November 19, 1995.

Gail Kursh,

Chief, Professional & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. St., N.W., Room 9300,

Washington, D.C. 20530

Re: U.S. vs Health Choice of Northwest

Missouri, Inc., et al, Case No. 95–6171–

CV–SJ–6 in the U.S. District Court for the

Western District of Missouri.

Dear Ms. Kursh: I am enclosing a copy of

an article from Home Health Line dated 11–

13–95 pursuant to the above captioned case.

Please know at first that I own no interest in

a Home Health Care Agency. The DOJ has

made an error. In short, you have given the

hospital the monopolistic power to slant

probably near 100% of their referrals to their

home health agencies. Discharge planners in

the hospital are people hired by the hospital.

Who but the hospital will they recommend

referral to. You are not giving any equal

accessibility to the patient’s to other home

health agencies. Hospitals also work out

various deals with physicians and these

physicians are eager to send all of their

patient’s to the hospital home health agencies

anyway.

This decision is so unreasonable and stinks

so badly that I am sending copies of this

letter and article to all my senators and

congressmen. I hope that they have the good

insight to bring up some sort of law that puts

a stop to a decision of this caliber. I cannot

for the life of me understand that you can feel

that there is any equity or justice in this

decision.

Thank you for the opportunity for

presenting my written comment.

Sincerely yours,

Dennis O. Davidson,

DOD/bjr.

cc:

Senator Dale Bumpers

Senator David Pryor

Senator Steve Bell

Congresswoman Blanche Lambert

Alternacare Home Health Services, Inc.

414 E. Main St., P.O. Box 2591, Lancaster,

OH 43130–5591, (614) 653–2224, (614) 653–

1333 FAX

November 21, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Dare Task Force,

Department of Justice, Antitrust Division,

600 E. St. NW, Room 9300, Washington,

D.C. 20530

Dear Ms. Kursh: I would like take the

opportunity to share my viewpoint regarding

the case United States vs. Health Choice of

Northwest Missouri, Inc., et al. It has been

my experience that hospitals do not present

the home health choice available to patients

who are being discharged from a hospital.

The discharge planners at our local hospital

inconsistently provide the written list of

choices—but rather verbally inform the

patient of a select few. (The local hospital has

a home health agency.)

It is not the responsibility of the hospital

to ‘‘credential’’ or endorse any agency.

Rather, it is the patient’s right to be made

aware of choices and have those choices

honored. The hospital can simply provide

the facts, via a brochure from each agency,

and allow the patient to make their selection.

This same unfair practice of referring to

hospital-owned agencies/companies is also

occurring in the Durable Medical Equipment

area of services and providers.

The referral policy of Heartland Health

Systems, Inc. (St. Joseph, MO) is unfair and

should not be acceptable. In the

recommended referral policy, the choice is

made for the patient, unless they choose

another option. Certainly it is clear that this

is not in accordance with the regulations

requiring patient choice. Instead, the patient

should be provided with available services

(again with printed brochure), then permitted

to make a choice. If the patient than has no

preference, then a system of rotating the

referrals to the local agencies may be

considered as equitable.

Please consider carefully before approving

any policy for referrals as proposed by

Heartland Hospital.

Sincerely,

Diane Flowers-Stuckey,

Director.

The Lee Visiting Nurse Association, Inc.

P.O. Box 415, Lee, Massachusetts 01238,

Telephone (413) 243–1212, FAX (413) 243–

4215

November 20, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St., Room 9300, Washington, D.C.

20530

Re: U.S. v. Health Choice of Northwest

Missouri, Inc., et al., Case No. 95–6171–

CV–SJ–6 in the U.S. District Court for the

Western District of Missouri

Dear Ms. Kursh: The referral policy

recommended by the DOJ for Heartland

Hospital is highly prejudicial. ‘‘Choice’’ is

most certainly diluted and may be seen as a

very subjective term when used by a hospital

discharge planner with affiliation to a

specific home care agency.

Having experience in this area, I can

imagine a patient being given a ‘‘choice’’ of

a particular agency which is in fact more of

a recommendation, a directive, or a

preference depending upon the approach of

the discharge planner. Most patients lack

knowledge in this area and tend to rely upon

the advice of the discharge planner: It is

unusual for a patient to state a specific

choice. However, if a patient expresses

uncertainty and then is directed to a

phonebook to ‘‘choose’’, this seems less than

supportive or helpful in any way. Hence,

choice is not a ‘‘choice,’’ and is, instead, a

sort of punitive arrangement whereby the

discharge planner essentially denies the

patient assistance in ‘‘choosing.’’

How perverse! Choice is a word loosely

interpreted these days, but since when is selfreferral considered a ‘‘choice?’’ Only the

most savvy, assertive patient could navigate

such a system. Antitrust is dead if this is how

the courts elect to interpret the patient’s right

to choose.

Sincerely,

Paula Schutzmann,

Executive Director, Certified Case Manager.

Sun Management Services

61 Duke Street, PO Box 232,

Northumberland, PA 17857, 99 South

Cameron Street, Harrisburg, PA 17101, 1–

800–577–5514

November 20, 1995.

Ms. Gail Kursh,

Chief, Professions and Intellectual Property

Services, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. Street, NW., Room 9300,

Washington DC 20530

Re: United States Health Choice of Northwest

Missouri, Inc., et al., Case Number: 95–

6171–CV–SJ–6

Dear Ms. Kursh: It is with great concern

that I read the proposed settlement as it

related to the recommended home health,

DME, and Hospice referral policy for

Heartland Hospital.

The policy repeatedly stated that ‘‘if the

patient has a preference, that preference shall

be honored.’’ We believe, however, that the

policy does nothing to ensure even a minimal

level of knowledge by the patient.

This policy is the equivalent of asking a

patient’s permission for major surgery

without providing any information regarding

risks or outcomes.

Patients at a minimum should be informed

of other providers and be provided

equivalent marketing materials that are used

by the hospital. Patients should be offered

access to other provider’s staff for the

purpose of evaluating options.

The argument by Heartland’s Attorney,

Thomas Watkins, that ‘‘there is no hospital

in the world that is going to want to bless

somebody else’s home health agency when

they cannot be responsible for care. We

cannot be in the position of educating the

patient—we don’t have the information’’ is

ridiculous.

Other providers are more than happy to

provide the hospital and the patient the

information required to make an informed

decision. Hospital Social Service

Departments routinely provide information

about community resources. To allow them

to act differently in areas where the hospital

has a vested financial interest is questionable

ethics at best.

The recommended referral policy not only

provides inadequate access to information

ensuring a patient’s ability to make an

informed choice but also provides the
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29817

hospital opportunity to be discriminate in

terms of what patient it chooses to serve.

It is common today for patients simply to

say yes to home health referrals; allowing the

hospital to self refer desirable patients and to

farm out to other provides those they wish

not to serve.

We believe that the recommend policy

protects the hospital’s vested investments at

the expense of an informed patient choice

and suggest appropriate revisions be

required.

Sincerely,

Steven Richard,

Senior Advisor.

Armstrong, Teasdale, Schlafly & Davis

A Partnership Including Professional

Corporations

Attorneys and Counselors

1700 City Center Square, 1100 Main Street,

Kansas City, Missouri 64105, (816) 221–3420,

Fax (816) 221–0786

November 21, 1995.

Via Federal Express

Ms. Gail Kursh, Esq.,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, 600 E Street, NW.,

Room 9300, Washington, DC 20530

Re: Objections and Comments of the

Coalition for Quality Healthcare to the

Proposed Final Judgment pending in

United States v. Health Choice of

Northwest Missouri, Inc., et al., Civil

Action No. 95–6171–CV–SJ–6, Western

District of Missouri, as published in the

Federal Register, Tuesday, October 3,

1995

Dear Ms. Kursh: This law firm represents

the Coalition for Quality Healthcare (the

‘‘Coalition’’), a nonprofit Missouri

corporation organized to assure consumer

access to timely and relevant information and

to promote competitiveness in the healthcare

field. This letter constitutes the formal

Comment and objections of the Coalition to

the proposed Final Judgment pending in the

above-referenced matter.

By way of background, the Coalition is

comprised of concerned citizens and

providers of ancillary healthcare services in

Northwest Missouri, including St. Joseph,

Missouri and its surrounding areas. Members

of the Coalition include owners of long-term

care facilities, home health care agencies,

pharmacies, medical equipment companies,

and other service oriented businesses

operating in the healthcare field.

The Coalition members firmly believe that

the proposed Final Judgment is not in the

best interest of the public primarily because

the proposed Final Judgment contains a

provision requiring Heartland Health System,

Inc. (‘‘Heartland’’) physicians to follow the

Heartland ‘‘Referral Policy’’ if a Patient needs

ancillary services upon discharge from acute

care. Comparison of the provisions of the

proposed Final Judgment to the Complaint

reveals the anomaly that the Complaint

focuses exclusively on defendants’ efforts to

foreclose competition from other managed

care plans in Buchanan County. Heartland’s

Referral Policy is not mentioned in the

Complaint and seems to have been

improvidently added to the proposed Final

Judgment.

The proposed Heartland Referral Policy

denies patients the right to make an informed

choice among ancillary service providers in

the Northwest Missouri area. Specifically, the

Coalition urges the Department of Justice to

remove the Heartland Referral Policy from

the proposed Final Judgment for the

following reasons:

A. The Referral Policy is not in the Public’s

interest because it prevents patients from

making an informed choice regarding

Ancillary Services:

* The proposed policy would allow the

doctor to initially order that a particular

ancillary service provider be used, rather

than allow the patient to choose freely among

any of the ancillary service providers in the

Northwest Missouri area. Because Heartland

employs or is otherwise associated with the

majority of physicians with staff privileges at

Heartland’s hospital, doctors will routinely

order Heartland ancillary service providers

for the patient. Hospital patients requiring

ancillary services are frequently elderly, in ill

health and are unlikely to question, let alone

contest, a doctor’s order, or understand the

basis for the recommendation.

* Even if the doctor does not designate a

certain ancillary service provider, the patient

is nonetheless steered to Heartland. Under

the proposed policy, the patient is only

informed that Heartland has excellent, fully

accredited ancillary services available and

then the patient is given a Heartland

brochure. The patient is not informed about

the availability of any competing ancillary

service providers in the Northwest Missouri

area.

* If the patient rejects Heartland’s

ancillary service providers, or specifically

asks what other providers are available, the

patient is not given the names of or any

information about non-Heartland providers.

Rather, the patient is told that Heartland

cannot provide any information about or

recommend any of the other ancillary service

providers and the patient is then merely

referred to the telephone book to look for

other providers.

* As a result of the foregoing, the

Consumer is denied timely and equal access

to sufficient information on ancillary service

options and quality to make an informed

choice.

B. Heartland, through its Referral Policy,

effectively monopolizes the ancillary services

market within Heartland’s geographic service

region, resulting in antitrust injury to other

ancillary service providers:

* Heartland, located in St. Joseph,

Missouri, is the only acute care facility in

Buchanan County. The closest comparable

facility is North Kansas City Hospital, located

in Clay County, Missouri, 60 miles south of

St. Joseph.

* Patients from private (non-Heartland)

long-term care facilities who are transferred

to Heartland’s hospital for acute care are not

returned to the private facility upon

discharge, even if the patient had been a long

term resident of the private facility. Rather,

the patients are transferred to either

Heartland’s skilled nursing facility, which

charges a higher daily rate than comparable

facilities in the community, or to Heartland’s

rehabilitation center. The patients are then

kept in these Heartland care facilities until

medicare days are exhausted. The patients

are only returned to their former private

facility if Heartland does not want them or

if the patient’s funds are depleted.

* Patients of private Home Health Care

agencies experience similar exclusion from

their prior provider. Patients who have been

cared for by a non-Heartland home health

care agency prior to being admitted to

Heartland’s hospital are not returned to that

agency upon discharge. Instead, patients are

being directed to Heartland’s home health

care unless the patient objects to the doctor’s

order or recommendation to use Heartland.

Because patients are often elderly, infirm and

forgetful, they do not know that they can

object to a change in home health care

providers and insist that their former agency

resume care upon the patient’s discharge.

* Heartland hospital staff do not give

notice to a patient’s prior ancillary service

provider when that patient is to be

discharged from the hospital. In some

instances, prior providers report that their

patients have been home for two to four days

with no follow-up care by their home health

care agency because the hospital failed to

notify the former provider of the patient’s

discharge. This is grossly harmful to the

patient and greatly affects the quality of the

patient’s care.

* Failure to give notice of a patient’s

discharge also prevents the prior ancillary

service providers from taking part in

discharge planning for their patients, thus

preventing the providers from competing in

the marketplace for the patient’s business.

Providers report having been specifically

denied the opportunity to participate in

discharge planning meetings for their

patients.

* Owners of private long-term care

facilities and home health care agencies

uniformly report a significant loss in revenue

and patient census since Heartland began its

Referral Policy which effectively eliminates a

patient’s choice.

* An institutional pharmacy which serves

60 nursing homes in St. Joseph and the

surrounding area has lost significant amounts

of business due to the overall loss of private

nursing home patients to the Heartland

system. Heartland’s own pharmacy services

the needs of patients using Heartland’s

ancillary services.

C. The Heartland Referral Policy and the

proposed Final Decree have no

accountability provisions to ensure that

Heartland Hospital patients, and patients of

Heartland’s physicians, are being given

sufficient, unbiased information to allow the

patient to make an informed choice among

all available ancillary service providers.

D. Taken together, the foregoing

considerations concerning the Heartland

Referral Policy, Heartland’s physician

practice and recruitment efforts, and

Heartland’s other conduct create conditions

that facilitate unlawful maintenance of

monopoly power by Heartland through

anticompetitive and coercive means,
29818 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

conditions conducive to a successful attempt

by Heartland to monopolize the ancillary

services markets in Northwest Missouri and

Northeastern Kansas, and conditions that

permit Heartland to channel or steer patients

in need of ancillary services only to

providers it owns, controls, or in which it

maintains a significant economic interest.

The antitrust concerns in this situation are

clear, the most significant of which is

foreclosure from referrals. The proposed

Referral Policy will only exacerbate this

situation and ultimately will result in an

insufficient number of referrals for

Heartland’s competitors in ancillary services

to remain viable. This, in turn, will increase

Heartland’s market power substantially and

create the risk of enabling Heartland to raise

and sustain prices above those which would

otherwise prevail in a competitive

marketplace, or lower the quality of care.

Whether analyzed in terms of Heartland’s

efforts to engage in exclusive dealing

agreements, tying arrangements, reciprocal

dealing agreements or monopolization and

attempted monopolization, via predatory

refusals to deal, abuse of essential facilities,

or monopoly leveraging, the anticompetitive

effects, which are contrary to the public

interest, are apparent.

The Coalition is currently drafting a model

Referral Policy which allows patients to

make an informed choice among all ancillary

service providers in the St. Joseph and

surrounding regions. We will provide the

Department of Justice and the District Court

with a copy of the model Referral Policy,

along with arguments and authorities in

support of its adoption, within the next 10

days.

While the ancillary services Referral Policy

is of paramount importance to the Coalition,

other terms and conditions of the Final

Judgment give unfair competitive advantage

to Heartland in the primary care physician

market. The Coalition specifically objects to

the following provisions in the Final

Judgment:

A. Part VIII: Heartland Permitted Activities

* Subpart (B)—Allows Heartland, without

preapproval from the DOJ, to employ or

acquire an unlimited number of physicians

who are not currently located in Buchanan

County, so long as less than 20% of the

physician’s income was derived from

patients living in Buchanan County;

* Subpart (C)—Puts no limit on the

number of new doctors that Heartland can

bring into Buchanan County to work for

Heartland (as employees or through acquiring

their practice), so long as Heartland incurs

substantial costs in recruiting the doctors, or

gives them substantial financial support or

income guarantees. Even though the

acquisitions require prior notice to the DOJ,

approval is given if the financial criteria are

met.

* Subpart (D)—Allows Heartland, with

prior DOJ, approval, to acquire the practice

or employ any physician who finds he or she

cannot practice in Buchanan County unless

hired by Heartland. This provision

underscores the real effect of Heartland’s

monopoly power, i.e. if independent

physicians cannot compete successfully with

doctors owned by Heartland, they have to

join Heartland to survive.

* The practical effect of the foregoing

provisions is that Heartland’s physician base

will continue to grow and monopolize the

market for GAPC physicians in Northwest

Missouri and Northeast Kansas, leaving sole

practitioners with little choice but to join

Heartland or move their practices elsewhere.

B. Part X–XI: Compliance Program /

Certifications

* Requires only self-reporting of

Heartland’s proposed acquisitions or other

actions covered by the Final Judgment and an

annual certification by the defendants that

the Final Judgment terms are being adhered

to.

* Although the DOJ is to be given ‘‘access’’

to defendant’s records and personnel and the

right to obtain written reports from any

defendants, there is no requirement that

written reports be made to the DOJ by any

of the defendants, and no requirement that

the DOJ will conduct annual, or better yet,

semi-annual inspection of books and records

and interview of personnel.

* Without an affirmative requirement of

regular, periodic written reports or DOJ

inspections to determine compliance, it will

be virtually impossible to determine whether

violations of the Final Judgment have

occurred.

* The proposed Final Judgment should

give the Court broader powers to monitor and

enforce the final judgment. For comparison,

see Judge Oliver’s opinion in United States

v. Associated Milk Producers, Inc., 394

F.Supp. 29, 46 (W.D. Mo. 1975), entering a

Supplemental Order establishing the manner

in which alleged violations of a final

judgment entered upon a proposed consent

decree should be brought before the Court for

appropriate judicial enforcement

proceedings.

The Coalition welcomes the opportunity to

engage in meaningful discussions with the

Department of Justice to clarify and

supplement the foregoing arguments and to

assist in any manner possible to assure that

the Final Judgment in this case is truly in the

public’s interest.

The Coalition looks forward to a response

from the Department of Justice to this

Comment.

Very truly yours,

Glenn E. Davis, Esq.

Thomas M. Bradshaw, Esq.

Dianne M. Hansen, Esq.

DMH/kag

cc: Coalition for Quality Healthcare

The Hon. Howard F. Sachs, Sr. District

Judge

Clerk of the District Court, Western District

of Missouri

Bennett C. Rushkoff, Esq., Assistant

Attorney General for the State of

Missouri

Ozarks Medical Center

1100 Kentucky Avenue, P.O. Box 1100, West

Plains, Missouri 65775, (417) 256–9111, FAX

(417) 257–6770

November 17, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

699 E Street, N.W., Room 9300,

Washington, DC 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6, U.S. District Court for

the Western District of Missouri

Dear Ms. Kursh: I am writing in support of

the proposed final judgement for the above

mentioned case, specifically related to the

discharge process and referrals to hospitalbased HHA, DME and hospital affiliates.

As a hospital vice president, I repeatedly

see the discharged process interrupted and

made complex by demands that every

ambulatory care provider within an hour’s

drive to our hospital be given access to and,

in some cases a guaranteed referral to,

patients being sent home for recuperation.

OMC demands that discharge workers recite

a carefully crafted script that does not

mention our many years of quality service

and coordination with inpatient services just

so that external firms will not claim that we

are hoarding referrals to ourselves.

I am especially in opposition to the

guidelines suggested by the Coalition for

Quality Healthcare. These guidelines, as I

understand them, would further drive a

wedge between hospital inpatient and

outpatient businesses. They would also

require hospitals to use a rotational system

for referrals among all area providers. This is,

in effect, stating that just by starting a new

business someone is automatically

guaranteed a proportional share of business,

irrespective of quality, service or their

commitment to the community. The

guidelines would also require hospitals to

permit freestanding providers a large degree

of visitation access to inpatients on hospital

property. This would be especially onerous

to patients and families during times of

illness and crisis. External sales personnel

could not be kept from repeated unwanted

intrusions into the patient’s care setting.

I urge the Department of Justice to stand

behind it’s initial HHA/DME guidelines. This

would permit better coordination of patient

care without fostering undue intrusion into

the care environment.

Yours truly,

Jeffrey B. Johnston,

Vice President for Operations.

Idaho Home Health, Inc.

800 Yellowstone Ave., Pocatello, ID 83201,

(208) 232–1122, (800) 491–2224, fax (208)

232–7941

November 16, 1995.

Gail Kursh,

Department of Justice, Antitrust Division, 600

E St. N.W. Room 9300, Washington, D.C.

20530

Re: Home Health Referral Protocol

Dear Ms. Kursh: We understand the

Department of Justice will receive input

regarding the recommendations for home

health referrals proposed in the United States

v. Health Choice of Northwest Missouri case.

Enclosed are several instances of hospital

channeling we uncovered in Idaho. If the DOJ
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29819

intends the recommendations only apply for

Antitrust issues this distinction should be

clearly and expressly stated so entities will

not apply it to non anti trust matters. If that

is the intent, however, we suggest the

recommendations be broadened to include 42

USC 1395a issues. Hospital patient

channeling and violation of patient choice

are the top issues facing proprietary agencies

today.

For your information, in Idaho during 1993

if proprietary home health agencies rather

than hospital based agencies had provided

the Medicare home health visits the Medicare

program would have saved millions of

dollars. It goes without saying historically

Hospital based home health visits are

significantly more expensive than proprietary

agencies. If the Government was really

serious about saving Medicare money it

would discontinue facilitating a situation

that lends itself to inefficient use of taxpayer

dollars. You must be aware the primary

motivation behind hospitals entering the

home health market is to ‘‘cost shift’’ hospital

overhead to the home health agency to

increase the visit cost up to Medicare

program limits. By doing this hospitals can

‘‘cost shift’’ millions of hospital dollars into

the home health agency thereby improving

the bottom line of the hospital.

We suggest a protocol of first asking the

patient if they have a preference of home

health agencies. If the answer is affirmative

then refer the patient to that agency. If the

answer is negative the patient is then

provided a list of agencies and the patient is

advised to call each agency and inquire

regarding charges and quality of service.

Since none of the other agencies can solicit

the patient while in the hospital it is unfair

to allow the patient to be solicited by the

hospital discharge planner on behalf of the

hospital agency. Alternatively, allow the

other agencies access to the patient at the

time of discharge to also recommend their

services similar to what the DOJ is allowing

the hospital employees to do. To allow the

hospital discharge planner, who is not an

employee of the hospital agency, to say the

hospital’s agency provides quality care and it

cannot comment on the quality of care at

other agencies is the same as channeling the

patient. To assume otherwise reflects a lack

of understanding of the market place.

Medicare law prohibits rebates or

kickbacks for patient referrals. If the hospital

is cost shifting part of its administrative

overhead to the home health agency and the

discharge planners salary is part of that

overhead allocation then the DOJ is

condoning violation of Medicare law. The

DOJ recommendation also fails to indicate

what sanction will take place if the

recommendations are violated.

This issue is most difficult and complex

and affects thousands of home health

agencies. It may also cost our Government

billions of unnecessary taxpayer dollars.

Please consider the above.

Sincerely,

William F. Bacon,

Vice President & General Counsel.

Health Data Services, Incorporated

November 22, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, NW., Room 9300,

Washington, DC 20530

Re: U.S. vs. Health Choice of Northwest

Missouri, Inc. et al., Case Number 95–

6171–CV–SJ–6, U.S. District Court,

Western District of Missouri

Dear Ms. Kursh: Our business is in Home

Health Care; Infusion, Durable Medical

Equipment and Home Health. The referrals

come from sources within the hospital walls.

As we continue to see more hospitals get

involved in the Home Health side of the

business, outside the confinement of the

hospital, our referrals continue to dry up.

The staff is instructed to provide minimal

amount of information about alternative

sources, furthermore, many of the physicians

are pressured ever so slightly to use the

Hospital Services. The patient’s benefits are

not looked after, only the financial concerns

of the hospital. As we continue to see the

dramatic changes in the hospital, they will

attack the most vulnerable, the independent

providers of Home Health Services, gobble

them up and provide less choices for the

patients. If our justice system continues to

allow the monopolizing of services by the

hospitals, the smaller communities will end

up with the hospital as the only choice.

Sincerely,

Glen H. Beussink,

Executive Director of HDS.

Gentle Homecare, Inc.

505 Laurel Avenue, Suite 203, Highland

Park, IL 60035, Tel: 708/432–9100 or 312/

764–5920, Fax: 708/432–9221.

November 22, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E Street,

NW., Room 9300, Washington DC 20530

Re: U.S. v. Health Choice of Northwest

Missouri, Inc., et al., Case No. 95–6171–

CV–SJ–6, In the U.S. District Court for

the Western District of Missouri

Dear Ms. Kursh: We vehemently oppose

the referral policy currently blessed by the

Dept. of Justice in an agreed-upon proposed

settlement between the Dept. of Justice and

Heartland Health System Inc., St. Joseph,

MO.

If this court decision becomes final, it will

effectively create regional monopolies. Freestanding home health agencies will be put

out of business, because you have now cut

us off from out patients, and given us no

means to compete.

Please reconsider—there have to be

stronger limitations on the hospital’s ability

to refer its patients to its own hospital-based

components.

We would appreciate a reply.

Very truly yours,

Susan Siegal,

Administrator.

Home Health Insights, Inc.

111 East Florence Blvd., Suite 1–B, Casa

Grande, Arizona 85222–4047, (602) 421–

2239, FAX (602) 421–2503

November 23, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street., N.W., Room 9300,

Washington, DC 20530

Dear Ms Kursh: I am writing to join my

voice with the Coalition for Quality

Healthcare in recommending their

modifications to your proposed settlement

with Heartland Health System of St. Joseph,

MO (Case #95–6171–CV–SJ–6). Our

community hospital, which does not operate

its own home health agency, currently uses

a rotation system for spreading referrals

among the area HHAs.

Sincerely,

Ross Feezer,

Adminstrator.

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. St.,

N.W., Room 9300, Washington, D.C.

20530

To Whom It May Concern: This is in

response to the Dept. of Justice proposed

judgement for United States v. Health Choice

of Antitrust Missouri, Inc. Case #95–6171–

CV–SJ–6.

As a health care provider (RN) and

consumer, it appalls me to know that

hospitals may not be required to inform

patients about alternatives in the health care

market. Because a hospital informs a client

of any available home health agencies does

not mean the hospital endorses such

agencies. Healthy competition is good for the

consumer and serves as a check and balance

system. Hospital based agencies would

usually monopolize the market if this referral

policy is permitted and quality care will be

compromised.

Also, economically, competition allows the

consumer to get the most service for their

money. Please do not permit this to change.

Sincerely,

Julie L. Miller,

RD 2 Box 58, Friendens, PA 15541.

November 15, 1995.

Gail Kursh,

Chief, Professionals and Intellectual

Property, Health Care Task Force,

Department of Justice, Anti-Trust

Division, 600 E Street, NW., Ste 9300,

Washington, DC 20530

Dear Mrs. Kursh: In response to the article

‘‘Courts Use Antitrust Law to Thwart Efforts

to Limit Spread of Managed Care’’, in the

Employee Benefit Plan Review, I must agree

with the actions of the court to limit the

actions of the managed care organization
29820 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

‘‘Health Choice’’. The primary concern that I

found when reading this article is the fact

that St. Joseph Hospital is a for-profit

hospital. All activities which this hospital

indulges itself are done to increase the

financial status of the hospital, thus causing

extensive investigation to occur with every

public action in which it participates. I feel

that had this been a non-profit hospital no

complaint would have been filed due to the

fact the company is operating to provide a

better care service for the community. It is

possible that Health Choice is operating to

provide a service to assist in the health care

of the community but due to the fact that

they are for-profit diminishes this idea,

primarily because all surplus revenue will

not only be used for the hospital’s needs but

it will be distributed among the staff of the

hospital. So who is really benefiting from this

conglomerate.

In a second observation, the restrictions set

upon Health Choice do not punish or fine the

institution for its practices, it just prohibits

any future activity. In light of these penalties

Health Choice still retains 85% of the

physicians working or residing in the area,

this is still a monopoly because the

remaining 15% will not be able to adequately

compete in the quantity of service which

they provide. I believe more drastic measures

should be taken or else the Health Choice

Network will eventually gain 100% of the

market, due to the fact that the remaining

15% join the organization or relocate their

practice.

I look forward to hearing your response to

these observations and thank you for the

opportunity to voice my opinion.

Sincerely,

David L. Hutchinson,

Public Administration Student, Michigan

State University.

VNA HealthCare Services

1789 South Braddock Avenue, P.O. Box

82550, Pittsburgh, PA 15218, 412/256–6910,

fax 412/256–6920

November 24, 1995.

Ms. Gail Kursh,

Chief, Profession & Intellectual Property

Section/Health Care Task Force,

Antitrust Division, U.S. Department of

Justice, 600 E. Street, N.W., Room 9300,

Washington, D.C. 20530

Re: United States v. Heartland Health

Systems Inc., Civil Action No. 95–6171–

CV–SJ–6

Dear Ms. Kursh: This comment is

submitted to urge the Justice Department

either to modify or, alternatively, to delete

entirely the ‘‘Referral Policy’’ regarding the

provision of ancillary services that is

attached to the Final Consent Judgment

against Heartland Health System, Inc. For

reasons explained below, that ‘‘Referral

Policy’’ would put the Justice Department’s

official approval on a policy that is seriously

deficient from both a practical and a legal

standpoint.

I am the Executive Director of VNA

HealthCare Services, which has been serving

the residents of Allegheny County,

Pennsylvania since 1919—more than 75

years. We have enjoyed an outstanding

record of high quality services to the

community and, as a non-profit organization,

provide services to many individuals without

resources. Independent home health

agencies, such as VNA HealthCare Services,

are dependent in substantial part on patient

referrals from hospitals and the physicians

on their medical staffs. Our experience in the

Pittsburgh area is similar to that across the

country, in that approximately 76% of our

patients come to us directly from hospitals.

Reasonable access to those patients, who

include persons with private and

governmental insurance, is essential to our

survival.

Recent changes in reimbursement

methodologies have given hospitals an

incentive to‘‘steer’’ patients to hospitalaffiliated home health care or other ancillary

services. Steering of that sort typically

involves: (1) Denying representives of

competing home health agencies access to

hospital premises and patients, even patients

who were under the care of the competing

home health agency prior to their hospital

admissions; (2) refusal to provide patients

with brochures or other information

regarding competing home health agencies;

(3) subtle and not-so-subtle pressure on

patients to select the hospital-affiliated

agency; and (4) pressure on hospital staff

physicians to make referrals to the hospitalaffiliated home care provider.

It is no exaggeration to say that the spread

of these practices has reached epidemic

proportions.

The Heartland referral policy does nothing

to address the access and informational

concerns that arise in a market in which

consumers (the patients) are typically

uninformed about their options. Contrary to

the stated goal of the Competitive Impact

Statement, the referral policy does not

prevent a dominant hospital such as

Heartland from foreclosing competition and

abusing its control over inpatient hospital

services to further its position in the

provision of ancillary services, such as home

health care. Under the Heartland policy, the

hospital’s ‘‘referring person’’ need not even

identify competing agencies of which it is

aware unless a patient specifically asks twice

about alternatives to the hospital’s ancillary

service. This is clearly not in keeping with

federal regulations requiring the hospital to

conduct a discharge planning process

devoted to patient concerns and long-term

best outcomes. Without sufficient patient

input in the decision-making process, an

inequitable and manipulative atmosphere

will result, given that many patients are

already frail, confused or distracted from

their normal decisionmaking capabilities at

time of discharge.

Furthermore, in the proposed policy the

hospital referring person is actually

encouraged to make what may well be a false

statement regarding lack of knowledge about

the alternative providers. A discharge

planning department’s reason for being is to

know what the community resources are and

to facilitate making them available. For the

Heartland patient population, however, at no

time is the hospital obligated to provide

brochures or other printed information about

alternatives to the hospital’s affiliate. The

referring person may, however, extol the

virtues of Heartland’s ‘‘excellent, fully

accredited,’’ ancillary service and provide a

Heartland brochure.

If the Justice Department is concerned

about stopping the erosion of competition in

home health care and other ancillary

services, we respectfully submit that it

should seek substantial modifications in the

Heartland Referral Policy. The modification

suggested below would help to restore

competition from smaller, independent

providers, but these are certainly not the only

approaches.

First, Heartland should be obligated to

provide patients with information about all

accredited home health care agencies in its

service area. Such a requirement could be

modeled after that which the Commonwealth

of Pennsylvania imposed earlier this year, as

a condition of its approval of a merger

between two hospitals in Harrisburg,

Pennsylvania. (A copy of that negotiated

settlement provision which has not yet been

entered by the court, and the Pennsylvania

Attorney General’s press release announcing

the settlement, are attached to this comment.)

Paragraph 19 of that settlement would

require the hospitals’ discharge planners to

provide each patient requiring home health

care services or home infusion services with

a list of all accredited agencies, and a

‘‘patient choice form,’’ which is attached to

the settlement agreement as Exhibit 2. That

Documentation of Choice form affirmatively

states that, ‘‘Basic information on each

agency will be provided to assist you in your

decision.’’ It adds that ‘‘any agency which

you desire will be contacted on your behalf,’’

and emphasizes that a selection of any

agency other than the hospitals’ affiliate

‘‘will in no way affect your care at [the

hospital] or prevent you from receiving

future care at [the hospital].’’

Second, the hospital’s referring person

should be prohibited from espousing the

benefits of the hospital’s affiliate unless

competing agencies are given an equal

opportunity to participate in a legally

appropriate manner in the discharge

planning process, and equal access to the

patient or the patient’s family.

Third, the hospital should be required to

allow at least one home health coordinator

from a competitor other than the hospital

affiliate, to be available on site.

Fourth, the hospital’s referring person

should be required, before asking if the

patient has a preference, to state affirmatively

that alternatives to the hospital’s affiliate are

available, that the patient will be given a list

of these alternatives (by name, address and

phone number) and that the referring person

will assist the patient in contacting them if

the patient so desires.

Fifth, if the patient and the patient’s family

have no preference, and no desire for written

information, then the patient’s physician

should make the choice of a home care

provider.

Sixth, Heartland should be prohibited from

directly or indirectly putting pressure on the

doctors on its medical staff to refer patients

to the hospital’s affiliated services.

My suggestions are intended to guide

dominant hospitals in complying with the
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29821

very general mandates of the Medicare

‘‘freedom of choice’’ provision and the

Sherman Act. The former statute provides

simply that ‘‘(a)ny individual entitled to

insurance benefits under this title may obtain

health services from any institution, agency,

or person qualified to participate under this

title if such institution, agency or person

undertakes to provide him such services.’’ 42

U.S.C. § 1395a. Unfortunately, courts have

held that foreclosed providers have no

private right of action for violation of this

section. Therefore, absent more forceful

action by the Government’s law enforcement

agencies, the patient’s right to choose his

provider of home care or other ancillary

services will remain a largely illusory one.

As you are undoubtedly aware, a plethora

of antitrust cases have recognized the

Sherman Act issues that should, but

evidently do not, constrain the actions of

vertically integrated hospitals. These include

the Key Enterprises v. Venice Hospital case

in Florida, and the M&M Medical Supplies

case in Virginia. Since resort to antitrust

litigation remains a prohibitively expensive

proposition for most home care and ancillary

service providers, this threat has not deterred

hospitals from engaging in exclusionary

conduct.

Although the Heartland consent decree,

will, of course, not have any formal

precendential value, health care providers

have become accustomed to careful scrutiny

of consent decrees, business review letters,

and informal advisory opinions for signs

regarding the direction of antitrust policy. I

respectfully submit that the proposed

Heartland Referral Policy sends the wrong

signal—a signal that hospital discharge

planners and social workers must merely go

through the motions of advising their

patients about alternatives to the hospital’s

affiliated services. A much more aggressive

policy is required to comply with the

hospital’s existing obligations to provide its

patients with freedom of choice. Nothing less

will overcome the access and informational

gaps that permit hospitals to exploit patients

at a time when they are particularly

vulnerable to steering tactics.

If I can provide any further information

regarding the problems that our home health

agency and other VNAs have encountered in

our efforts to compete with hospital-owned

and hospital-based home health agencies,

please do not hesitate to contact me.

Thank you in advance for your

consideration of this comment.

Respectfully submitted,

Andrew R. Peacock

ARP:eu

In the United States District Court for

the Middle District of Pennsylvania

Commonwealth of Pennsylvania, Plaintiff,

v. Capital Health System Services and

Polyclinic Health System, Defendants. Civil

Action No. .

Final Judgment

Whereas the Commonwealth of

Pennsylvania (‘‘Commonwealth’’) filed a

Complaint in this matter on lllll,

as a direct purchaser of inpatient acutecare hospital services in Cumberland,

Dauphin, and Perry Counties and as

parens patriae to protect its general

economy, pursuant to section 7 of the

Clayton Act, 15 U.S.C. § 18;

Whereas Capital Health System

Services (‘‘CHS’’) and Polyclinic Health

System (‘‘PHS’’) agreed on September

28, 1994, to merge these two

independent health-care entities

(hereinafter referred to as ‘‘New Co’’)

into an integrated community healthcare delivery system for central

Pennsylvania;

Whereas New Co is expected to

generate a net cost savings of at least

$70 million over the first five-year

period following implementation and

annual savings thereafter of about $21

million, to improve quality of health

care for central Pennsylvania residents,

and to increase access to health care

services for central Pennsylvania

residents, including the indigent and

the otherwise underserved;

Whereas the Office of Attorney

General of the Commonwealth

(‘‘Attorney General’’) is responsible for

enforcement of the federal antitrust laws

and is authorized to bring suit on behalf

of the Commonwealth as a direct

purchaser of inpatient acute-care

hospital services and as parens patriae

to protect its general economy;

Whereas CHS and PHS have

cooperated fully with the Attorney

General’s investigation of the proposed

consolidation;

Whereas the Attorney General has

concluded its investigation of the

proposed consolidation of the two

health-care systems and believes that,

without this Final Judgment, it may

raise anticompetitive concerns under

the federal antitrust laws;

Whereas CHS and PHS desire to

assure the Attorney General and the

community that they intend to operate

New Co in accordance with their

mission and continue their commitment

of providing quality, affordable health

care to the community;

Whereas CHS and PHS, desiring to

resolve the Attorney General’s concerns

without trail or adjudication of any

issue of fact or law, have consented to

entry of this Final Judgment; and

Whereas this Final Judgment is not an

admission of liability by CHS, PHS, or

New Co as to any issue of fact or law

and may not be offered or received into

evidence in any action as an admission

of liability; it is hereby ORDERED:

I. Jurisdiction

1. This Court has jurisdiction over the

subject matter of this action and each of

the parties consenting to this Final

Judgment. The Complaint states a claim

upon which relief may be granted.

II. Definitions

As used in this Final Judgment:

2. ‘‘Capital Health System Services’’

(‘‘CHS’’) means the nonprofit taxexempt corporation organized under the

laws of the Commonwealth of

Pennsylvania that is the corporate

parent of Harrisburg Hospital (‘‘HH’’), a

nonprofit tax-exempt hospital located at

111 South Front Street, Harrisburg,

Pennsylvania, and Seidle Memorial

Hospital (‘‘SMH’’), a nonprofit taxexempt hospital located at 120 South

Filbert Street, Mechanicsburg,

Pennsylvania.

3. ‘‘Polyclinic Health System’’

(‘‘PHS’’) means the nonprofit taxexempt corporation organized under the

laws of the Commonwealth of

Pennsylvania that is the corporate

parent of the Polyclinic Medical Center

(‘‘PMC’’), a nonprofit tax-exempt

hospital located at 2601 North Third

Street, Harrisburg, Pennsylvania.

4. ‘‘New Co’’ means the nonprofit

corporation that CHS and PHS will

create pursuant to their September 28,

1994, agreement to merge.

5. ‘‘Member Hospital’’ means HH,

PMC or SMH.

6. ‘‘Managed-Care Plan’’ means a

health maintenance organization,

preferred provider organization, or other

health-service purchasing program

which uses financial or other incentives

to prevent unnecessary services and

includes some form of utilization

review.

7. ‘‘Health Plans’’ means all types of

organized health-service purchasing

programs, including but not limited to

managed-care plans, offered by thirdparty payors, health-care providers or

any other person.

8. ‘‘Health-Care Provider’’ means

physicians, hospitals, laboratories and

physician networks.

9. ‘‘Acquire’’ means to purchase the

whole or the majority of the assets,

stock, equity, capital or other interest of

a corporation or other business entity, or

to receive the right or ability to

designate the majority of directors or

trustees or otherwise control the

management of a corporation or other

business entity.

10. ‘‘Net Cost Savings’’ means the

difference between the total

expenditures that CHS and PHS would

have incurred absent the consolidation

of the two health systems and their total

expenditures actually made, minus the

total expenditures incurred to

implement the consolidation into New

Co. As a guide to help calculate net cost

savings, the parties will use the
29822 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Efficiency Study for the Consolidation

of CHS and PHS, dated November 1994,

as amended.

11. ‘‘Hospital’’ means a health care

facility, licensed as a hospital, having a

duly organized governing body with

overall administrative and professional

responsibility, and an organized

professional staff that provides 24-hour

inpatient care, that may also provide

outpatient services, and having as a

primary function the provision of

inpatient services for medical diagnosis,

treatment, and care of physically injured

or sick persons with short term or

episodic health problems or infirmities.

III. Terms

12. Anticipated Savings and Price

Reductions. CSH and PHS intend to

merge and consolidate services into

New Co, increase efficiency, and reduce

the cost of delivering health-care

services so that the cost to the

community of those services will be

lower than they would have been absent

the merger.

12.1 New Co shall achieve in 199l

constant dollars at least $70 million in

net cost savings by [five years after

closing]. At least 80% of the net cost

savings New Co achieves in each of the

first five years shall be passed on to

consumers or other purchasers of

health-care services in the form of lowcost or no-cost health-care programs for

the community or by reducing prices or

limiting actual price increases for

existing services. Prior to passing on any

such cost savings to consumers or other

purchasers of health-care services in the

form of low-cost or no-cost health-care

programs, New Co shall submit in

writing to the Office of Attorney General

their proposal(s) for passing on such

cost savings, which will be

automatically approved unless the

Office of Attorney General objects to any

specific proposal within ten (10)

business days following receipt of such

proposal. At a minimum, the following

cumulative net cost savings shall be

passed on; $0 by [one year after closing];

$5.6 million by [two years after closing];

$24 million by [three years after

closing]; $40 million by [four years after

closing]; and $56 million by [five years

after closing]. These savings shall be

documented in the annual report

described in Paragraph 23. The parties

will develop a mutually-agreed upon

model to measure the net cost savings

on a case mix, inflation index adjusted

net cost per admission basis in

comparison to pre-merger costs, and the

cumulative net cost savings passed on to

consumers on a case mix, inflation

index adjusted net revenue per

admission basis. If New Co fails to meet

the targeted net cost savings in any

given fiscal year, the shortfall amount

shall be carried forward into subsequent

fiscal year until the full net cost savings

amount has been realized by New Co,

including the portion to be passed on as

described above. If New Co exceeds the

targeted net cost savings in any given

year, the excess amount shall be

credited towards New Co’s target for the

next fiscal year.

12.2 If by [five years after closing],

New Co has not achieved $70 million in

net cost savings, New Co shall pay in

cash an amount equal to $70 million

less the amount of savings actually

achieved into a fund established by the

Attorney General. The Attorney General

shall use this money to fund low-cost or

no-cost health-care services to

Cumberland, Dauphin and Perry County

residents, such as child immunizations,

mammograms, drug and alcohol abuse

treatment programs, or other health-care

services needed by the community for

which adequate resources are not

available. The Attorney General shall

select, after receiving any input from

New Co, a charitable organization to

administer these funds. If New Co has

not achieved $70 million in net cost

savings, New Co shall have an

opportunity to demonstrate, to the

satisfaction of the Attorney General, that

circumstances beyond its control have

prevented achievement of the savings.

12.3 If by [five years after closing],

New Co has not achieved at least $66.5

million of the anticipated net cost

savings, the restrictions on changes in

the case-mix adjusted net inpatient

revenue per admission contained in

Subparagraph 12.4 shall continue until

[ten years after closing], regardless of

whether the Final Judgment is

terminated any time earlier pursuant to

Paragraph 33.

12.4 New Co’s case-mix adjusted net

inpatient revenue per admission for all

inpatients treated during the fiscal year

under consideration at member

hospitals (hereinafter ‘‘Revenue’’), in

fiscal years subsequent to 1994–95, shall

not exceed the combined Revenue of the

member hospitals for 1994–95, as

adjusted pursuant to Subparagraph 12.5,

and excluding the effects of New

Services, as defined in Subparagraph

12.6, outliner cases, and externally

imposed requirements, including but

not limited to changes in payment

methods or reimbursement methods

imposed or implemented by state or

federal regulations.

12.5 In determining compliance

with Subparagraph 12.4, Revenue shall

be adjusted (up or down) for changes in

the Consumer Price Index-Urban, plus

two percent.

12.6 ‘‘New Services’’ means either

(a) services not listed on Exhibits 1–A,

1–B or 1–C (copies of which are

appended hereto), which list services

provided at each of the member

hospitals as of entry of this Final

Judgment; or (b) material changes in

community need, technology, or

sophistication of treatment which either

(i) require a certificate of need or (ii)

require a combination of new capital,

personnel and supply expenditures in

excess of $100,000 in any fiscal year.

Upon request by the Attorney General,

New Co shall provide all information

and documentation reasonably

necessary to support the application of

this subparagraph. If New Services are

provided, they shall be described in the

annual report to the Attorney General,

required by Paragraph 23.

12.7 If New Co fails to comply with

Subparagraph 12.4, it shall reimburse

the excess by lowering its rates in the

next fiscal year in an amount equal to

the excess. If New Co exceeds the

targeted Revenue savings in any given

year, the savings amount shall be

credited towards New Co’s target for the

next fiscal year. In the annual report

described in Paragraph 23, New Co shall

describe its compliance with this

subparagraph.

12.8 Subparagraphs 12.3, 12.4, 12.5,

12.6, and 12.7 shall apply only during

those fiscal years when the

Commonwealth of Pennsylvania or the

federal government does not

substantially regulate hospital rates.

13. Nonexclusivity.

13.1 New Co shall not enter into any

provider contract with any health plan

on terms that prohibit New Co from

entering into a provider contract for any

services New Co offers with any other

health plan.

13.2 New Co shall not require

managed-care plans to contract with its

employed doctors as a precondition to

contracting with its member hospitals.

13.3 New Co shall not restrict an

independent physician’s ability to

provide services or procedures outside

the member hospitals, unless

performance of duties outside the

member hospitals would impair or

interfere with the safe and effective

treatment of a patient.

13.4 New Co shall not prohibit

independent physicians who are

members in any New Co physicianhospital network from participating in

any other physician-hospital networks,

health plans, or integrated delivery

systems.

14. Nondiscrimination.

14.1 New Co shall not enter into any

exclusive contracts with any health-care

provider by which it requires that
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29823

provider to render services only at a

member hospital or by which it requires

only one physician or group of

physicians to provide particular services

at a member hospital. New Co may enter

into exclusive contracts with

anesthesiologists; radiologists; nuclear

medicine physicians; pathologists;

physiatrists; emergency-room

physicians; neonatologists;

perinatologists; cardiologists,

cardiovascular surgeons, and

neurologists for interpretive services

only; radiation oncologists; and

physicians providing services in New

Co’s low-income clinics, so long as

these contracts are competitively bid at

least once every three years and the

bidding specifications affirmatively

require the winning physician(s) not to

refuse unreasonably to participate in

any health plans that have provider

contracts with the member hospitals.

This provision, however, shall not

require New Co to terminate any

existing contracts, and New Co may

require its employed physicians to

render services only at member

hospitals. New Co may also petition the

Attorney General for approval to enter

into exclusive contracts with physicians

in specialties other than those listed

above. The Attorney General shall

provide New Co with a response to the

petition within ninety (90) days.

14.2 Other than as provided in

Paragraph 14.1, New Co shall provide

an open staff, ensuring equal access to

all qualified physicians in Cumberland,

Dauphin, and Perry Counties according

to the criteria of the Joint Commission

on Accreditation of Health Care

Organizations and the medical staff bylaws.

14.3 New Co shall negotiate in good

faith with all health plans with a

licensed service area within

Cumberland, Dauphin, or Perry

Counties which approach it seeking a

provider contract. This provision,

however, shall not be construed to

require a New Co to enter into a

provider contract with any particular

health plan.

14.4 New Co shall not enter into

provider contracts with any licensed

health plan operated by New Co itself,

in existence now or which may be

created, on terms available to that plan

solely because it is sponsored by New

Co, where doing so would place other

comparable licensed health plans at a

competitive disadvantage, because of

any market power New Co may have

rather than from efficiencies resulting

from its integration with its health plan.

14.5 With respect to Health Central,

Inc., the new managed-care plan

proposed by six south central

Pennsylvania hospitals, including CHS,

New Co will participate in this plan

only on nonexclusive terms. Further,

New Co will not engage in any ‘‘mostfavored-nation’’ pricing with respect to

this plan vis-a-vis other competing

managed-care plans in its market, and

will not cross-subsidize Health Central,

Inc. through the operating revenues of

New Co in a manner that would

facilitate predatory pricing or other

anticompetitive conduct. New Co shall

disclose, as part of its annual report

pursuant to Paragraph 23, all funds that

were provided by New Co to Health

Central, Inc. during the preceding fiscal

year.

14.6 New Co will not use

employment, the location of a physician

or group practice, or the location where

patients will receive any necessary

follow-up care to determine referrals

from the emergency room. New Co may

consider quality of care and reasonable

proximity for patient convenience in

determining referrals. The referral

policy used to inform unassigned

patients of the availability of follow-up

care shall be provided to the Attorney

General within thirty (30) days from

entry of this Final Judgment. Should the

Attorney General object to this policy,

the parties shall attempt to reach a

mutually satisfactory resolution. This

subparagraph shall not preclude any

managed-care plan operated by New Co

from limiting referrals to providers with

provider contracts with that plan.

14.7 Except as provided in

Paragraph 14.1, if New Co establishes or

sponsors its own health plan, it shall

not base credentialing decisions or other

decisions affecting a physician’s access

to, or working conditions at, a member

hospital on whether that physician

enters into a provider contract with

either New Co’s plan or with a

competing plan.

15. Health Plans.

15.1 New Co will not unreasonably

terminate any provider contracts to

which its member hospitals are parties

as of the date of entry of this Final

Judgment.

15.2 New Co shall attempt, in good

faith, to contract with all health plans

operating in its service area which offer

commercially-reasonable terms on a

fully-capitated basis, a percentage of

premium revenue basis, or on other

terms that require New Co to assume

risk. New Co shall not refuse to contract

with a health plan solely because such

plan proposes a capitated contractual

reimbursement methodology. This

provision, however, does not require

New Co to enter into a provider contract

with any particular health plan or with

all health plans.

16. Employment of Physicians.

16.1 New Co shall be prohibited

from employing more than 20% of the

physicians in Cumberland, Dauphin and

Perry Counties practicing in any of the

following areas: family practice/internal

medicine, pediatrics, or obstetrics/

gynecology, except as provided in

Subparagraph 16.2. In calculating this

percentage, full-time residency faculty

members employed by New Co shall be

counted as one half each and physicians

employed at the HH or PMC low-income

clinics shall be excluded.

16.2 New Co may recruit and

employ physicians from outside

Cumberland, Dauphin, and Perry

Counties into those counties, in any of

the enumerated areas listed in

Subparagraph 16.1 without regard to or

in violation of the 20% limitation in

that subparagraph.

16.3 In determining New Co’s

compliance with Subparagraph 16.1, up

to 79 residents employed by New Co

shall be excluded. Additional residents

beyond 79 shall be counted at one half

each.

16.4 New Co shall not solicit the

employment of any physician or group

practice within Cumberland, Dauphin,

and Perry Counties if such employment

would cause New Co to exceed the

limitations imposed by Subparagraph

16.1.

16.5 New Co may petition the

Attorney General in writing for an

exception to Subparagraph 16.1 when

market conditions exist for employing

physicians in any of the enumerated

categories above the 20% limitation

level. The Attorney General will

respond to the petition within thirty

(30) days from the receipt of all

information reasonably necessary from

New Co to analyze the petition.

17. Operating Room Scheduling.

Operating room scheduling shall be

determined by an Operating Room

Committee that includes physicians,

operating room nurses, and

representatives of hospital

administration, according to the

following criteria:

17.1 Operating room time will be

assigned in blocks based on physicians’

demonstrated need for access to

operating rooms.

17.2 These assignments will be

updated quarterly, based on actual

usage of block time. If a particular slot

is not reserved by the physician to

which it is allocated prior to 24 hours

before the time of that slot, the time will

be released and will be assigned to other

physicians on a first-come first-served

basis. If a physician is not utilizing a

sufficient amount of reserved time, that

physician’s block time will be
29824 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

reassigned at the time of the quarterly

update.

18. ‘‘Most-Favored-Nation’’ Provisions

in Contracts With Health Plans. New Co

shall not enter into any provider

contract with any health plan on terms

which include a most-favored-nation

clause to the benefit of New Co or any

health-care plan. A most-favored-nation

clause is any term in a provider contract

that allows the buyer to receive the

benefit of any better payment rate, term

or condition that the seller gives another

provider for the same service. In the

case of any existing most-favored-nation

clause to the benefit of New Co or any

health-care plan in current provider

contracts, New Co agrees not to renew

or extend such contracts without

deleting that term. New Co shall inform

the Attorney General of the presence of

a most-favored-nation clause in any

existing provider contracts by providing

a list of such contracts to the Attorney

General not more than thirty (30) days

from entry of this Final Judgment.

19. Ancillary Services. CHS shall, as

soon as is practicable but in no event

later than twelve (12) months of entry of

this Final Judgment, divest all of its

assets and interests in Capital Health

Products, its durable medical equipment

company, to a third-party buyer.

Further, New Co shall not require any

healthcare purchaser or patient to

purchase home health services or home

infusion therapy services from any

entity affiliated with New Co. If

companies not affiliated with New Co

cannot provide services in a manner

that would permit New Co to contain

costs in the context of risk-bearing

contracts, New Co may require these

services to be purchased from a

company affiliated with New Co. In all

other circumstances, New Co shall

affirmatively inform patients and

providers needing home health-care

services or home infusion therapy

services of the availability of such

services from companies not related to

New Co. In this regard, New Co’s

discharge planners must provide each

patient requiring home health-care

services or home infusion therapy

services with a patient choice form,

which is appended as Exhibit 2, and

with a list of all home health-care and

home infusion therapy agencies

accredited by the Joint Commission on

Accreditation of Health Care

Organizations serving Cumberland,

Dauphin, and Perry Counties. This

provider list must be updated at least

quarterly if New Co is requested to do

so by a qualified agency; and, if a home

health-care or home infusion therapy

agency that is not affiliated with New

Co is selected by the patient, that agency

must be given reasonable access to the

patient’s records and to the member

hospital’s premises so that it may begin

providing needed services to that

patient. The provisions of this

paragraph will also be applicable to

CHS’s durable medical equipment

company until the sale of that company

is completed.

20. Certificates of Need. New Co shall

not oppose certificates-of-need

applications filed by other hospitals or

other health-care providers with the

Pennsylvania Department of Health

unless it notifies the Attorney General

in writing, as soon as practicable but at

least seven (7) days prior to filing any

opposition, and provides a copy of any

opposition to the Attorney General

when it is filed with the Department.

21. Future Sales and Acquisitions of

Hospital Assets. New Co shall not,

without the prior approval of the

Attorney General, acquire any

indemnity plan, health maintenance

organization, or hospital in Cumberland,

Dauphin, or Perry Counties or permit

any indemnity plan, health maintenance

organization, or hospital in these

counties to acquire New Co. New Co

may not enter into any joint ventures

with any hospital in Cumberland,

Dauphin, or Perry Counties; acquire any

hospital outside Cumberland, Dauphin,

or Perry Counties; or permit any

hospital outside Cumberland, Dauphin,

or Perry Counties to acquire New Co,

without first giving at least 60 days

notice to the Attorney General. The

preceding sentence, however, shall not

apply to joint ventures to provide

residency programs or to joint ventures

with annual operating costs of below

$100,000.

22. Binding on Successors and

Assigns. The terms of this Final

Judgment are binding on New Co and its

directors, officers, managers and

employees, successors and assigns,

including but not limited to any person

or entity to whom New Co may be sold,

leased or otherwise transferred, during

the term of its duration, and all persons

who are in active concert or

participation with them and who have

actual or constructive notice thereof.

New Co shall not permit any substantial

part of New Co to be acquired by any

other person unless that person agrees

in writing to be bound by the provisions

of this Final Judgment.

23. Reporting Mechanism.

23.1 Within 150 days from the close

of each fiscal year during which this

Final Judgment is in effect, New Co

shall submit to the Attorney General an

annual report accompanied by an

officer’s compliance certificate

describing its compliance with this

Final Judgment. This report shall

include a discussion of the steps taken

by New Co to comply with the

efficiencies and services reconfiguration

plans and the estimated savings from

these steps. The Attorney General will

provide notice to New Co of any

concerns raised by the annual

compliance report within a reasonable

time after its issuance. New Co will

meet with the Attorney General to

attempt to resolve any concerns that the

Attorney General may raise from its

review of the report.

23.2 New Co will reimburse the

Attorney General for expenses,

including the payment of any expert

fees, incurred in analyzing and verifying

this report, in an amount not to exceed

$10,000 per year. Within sixty (60) days

from entry of this Final Judgment, New

Co will pay the Attorney General $5,000

to establish a mutually-agreed upon

model to be used to analyze compliance.

This amount shall be deducted from the

first year’s reimbursement requirement.

New Co will cooperate with any expert

hired by the Attorney General,

including but not limited to providing

any additional requested information

reasonably necessary to complete the

analysis and verification of the

compliance report.

24. Publication of Efficiency Report.

New Co shall prepare, subject to the

Attorney General’s approval, a

condensed version of its efficiency

report to be released to the general

public within fourteen (14) days from

entry of the Final Judgment.

25. Compliance. To determine or

secure compliance with this Final

Judgment, any duly authorized

representative of the Attorney General

shall be permitted:

25.1 Upon reasonable notice, access

during normal business hours to all

non-privileged books, ledgers, accounts,

correspondence, memoranda, and other

records and documents, in the

possession or under the control of New

Co, relating to any matters contained in

this Final Judgment; and

25.2 Upon reasonable notice, access

during normal business hours to

interview officers, managers or

employees regarding any matters

contained in this Final Judgment.

26. Complaint Procedure. Any person,

including health-care providers, health

plans, or consumers of medical services,

who wishes to report a possible

violation of this Final Judgment shall

send a written description of the

possible violation to the Chief Deputy

Attorney General, Antitrust Section,

Office of Attorney General, 14th Floor,

Strawberry Square, Harrisburg,

Pennsylvania 17120 and to New Co’s
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29825

President, 17 South Market Square, P.O.

Box 8700, Harrisburg, Pennsylvania

17105. New Co shall respond in writing

to the complainant and to the Attorney

General within thirty (30) days from

receipt of any complaint. If the

complaint is still unresolved, the

Attorney General will attempt to

negotiate a satisfactory resolution. If

New Co believes any complaint to be

frivolous, it may so advise the Attorney

General, and its obligations under this

paragraph will be satisfied unless it is

otherwise advised by the Attorney

General to respond more fully to the

complaint.

27. Reimbursement of Expenses.

Upon entry of this Final Judgment, CHS

and PHS shall jointly pay $50,000 to

reimburse the Attorney General’s costs

incurred to conduct its investigation,

which payment shall be used for future

Public Protection Division enforcement

purposes.

28. Enforcement.

28.1 If the Attorney General believes

that there has been a violation of this

Final Judgment, it shall promptly notify

New Co thereof. The Attorney General

shall thereafter permit New Co a

reasonable opportunity to cure any

alleged violation without instituting

legal action. If the alleged violation is

not substantially cured by New Co

within sixty (60) days of notification,

the Attorney General may thereafter

undertake any remedial action it deems

appropriate. This time period shall be

extended in circumstances where the

sixty (60) day period is not sufficient

time to cure the alleged violation.

28.2 In any action or proceeding

brought by the Attorney General to

enforce this Final Judgment or

otherwise arising out of or relating

hereto, the Attorney General, if it is the

prevailing party, shall recover its costs

and expenses, including a reasonable

sum for attorneys’ fees.

29. Legal Exposure. No provision of

this Final Judgment shall be interpreted

or construed to require New Co to take

any action, or to prohibit New Co from

taking any action, if that requirement or

prohibition would expose New Co to

significant risk of liability for any type

of negligence (including negligent

credentialing or negligence in making

referrals) or malpractice.

30. Notices. All notices required by

this Final Judgment shall be sent by

certified or registered mail, return

receipt requested, postage prepaid, or by

hand delivery, to:

If to the Attorney General:

Chief Deputy Attorney General,

Antitrust Section, Office of

Attorney General, 14th Floor,

Strawberry Square, Harrisburg, PA

17120

If to New Co:

President, New Co, 17 South Market

Square, P.O. Box 8700, Harrisburg,

PA 17105

31. Averment of Truth. New Co avers

that the information it has provided to

the Attorney General in connection with

this Final Judgment, to the best of its

knowledge, is true and represents the

most recent and comprehensive data

available, and that no material

information has been withheld.

32. Termination. This Final Judgment

shall expire on the tenth anniversary of

its date of entry if it has not terminated

prior to that time as provided in

Paragraph 33. Notwithstanding the first

sentence of this paragraph, enforcement

of Paragraph 16 shall expire on the fifth

anniversary of entry of this Final

Judgment.

33. Early Expiration. After [five years

from closing], if New Co has complied

with the applicable provisions of this

Final Judgment, the Attorney General

shall join New Co in an application to

this Court for an order terminating, in

whole or in part, this Final Judgment.

The Attorney General shall not

unreasonably refuse to join any such

application.

34. Modification. If either the

Attorney General or New Co should

believe that modification of the Final

Judgment would be in the public

interest because of changed or

unforeseen circumstances or for other

reasons, that party shall give notice to

the other, and the parties shall attempt

to agree on a modification. If the parties

agree on a modification, they shall

jointly petition the Court to modify the

Final Judgment. If the parties cannot

agree on a modification, the party

seeking modification may petition the

Court for modification and shall bear

the burden of persuasion that the

requested modification is in the public

interest.

35. Retention of Jurisdiction. Unless

this Final Judgment is terminated early

pursuant to Paragraph 33, jurisdiction is

retained by this Court for ten (10) years

after entry to enable any party to apply

to this Court for such further orders and

directions as may be necessary and

appropriate for the interpretation,

modification and enforcement of this

Final Judgment.

Dated this 20th day of July, 1995.

Walter W. Cohen,

Acting Attorney General, Commonwealth of

Pennsylvania.

Carl S. Hisiro,

Chief Deputy Attorney General, Antitrust

Section.

James A. Donahue, III,

Senior Deputy Attorney General, Antitrust

Section, Office of Attorney General, 14th

Floor, Strawberry Square, Harrisburg, PA

17120, (717) 787–4530, Attorneys for the

Commonwealth of Pennsylvania.

Capital Health System.

John S. Cramer,

President and Chief Executive Officer.

Attest: Cheryl P. Makle

Polyclinic Health, System.

Stephen H. Franklin,

President and Chief Executive Officer.

Attest: M.M. Van Bly

Toby G. Singer, Esquire.

Stephen D. Kiess, Esquire,

Jones, Day, Reavis & Pogue, Metropolitan

Square, 1450 G Street, N.W., Washington, DC

20005–2088, (202) 879–3939, Attorneys for

Capital Health System and Polyclinic Health

System.

So Ordered: lllllllllllllllllllll

United States District Judge

Exhibit 1–A—Harrisburg Hospital

Inpatient Services

General inpatient care for HIV/AIDS

Birthing room/LDRP room

Open-heart Surgery

Cardiac intensive care unit

Angioplasty

Chronic obstructive pulmonary disease

service

Hemodialysis

Medical surgical or other intensive care

unit

Histopathology laboratory

Neonatal intensive care unit

Obstetrics unit

Pediatric acute inpatient unit

Reproductive health services

Organized social work services

Organ/tissue transplant

Orthopedic surgery

Occupational therapy services

Physical therapy services

Respiratory therapy services

Speech therapy services

Oncology services

CT Scanner

Diagnostic radioisotope facility

Ultrasound

Blood bank

Patient education

Exhibit 1–B—Seidle Memorial Hospital

Inpatient Services

Skilled nursing or other long-term care

Organized social work services

Physical therapy services

Recreational therapy services
29826 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Speech therapy services

Exhibit 1–C—Polyclinc Medical Center

Inpatient Services

General inpatient care for HIV/AIDS

Birthing Room/LDRP room

Cardiac catherization laboratory

Open-Heart Surgery

Cardiac Intensive Care Unit

Angioplasty

Chronic obstructive pulmonary disease

service

Emergency Department

Medical surgical or other intensive care

units

Neonatal Intensive Care Unit

Obstetrics Unit

Pediatric Acute Inpatient Unit

Psychiatric Inpatient Service

Extracorporeal Shock-Wave Lithotripter

Alzheimer’s diagnostic/Assessment

Services

Comprehensive Geriatric Assessment

Emergency Response (Geriatric)

Geriatric Clinics

Respite Care

Senior Membership program

Patient Education

Community Health Promotion

Worsite Health Promotion

Hemodialysis

Histopathology Laboratory

Blood Bank

Occupational Health Services

Psychiatric Consultation/Liasion

Services

Psychiatric Geriatric Services

Megavoltage Radiation Therapy

Rehabilitation Inpatient Unit

Skilled Nursing or Other Long-Term

Care Unit

Orthopedic Surgery

Magnetic Resonance Imaging (MRI)

Therapeutic Radioisotope therapy

CT scanner

Reproductive health services

Single photon emission computerized

tomography

Organized social work services

Patient representative services

Occupational therapy services

Physical therapy services

Recreational therapy services

Respiratory therapy services

Speech therapy services

Health sciences library

Cardiac rehabilitation program

Non-invasive cardiac assessment

services

Mammography Screening Services

Mammography diagnostic services

Oncology services

Exhibit 2—[New CO] Referrals for Home

Health and/or Home Health

Equipment—Documentation of Choice

PATIENT: lllllllllllllll

D.O.B. lllllllllllllllll

Your physician(s) llllll, has

recommended that you receive visiting

nurse or other home health services

after you are discharged from the

hospital. A listing of agencies offering

visiting nursing and/or home health

care services in the region is available

for your review. A representative from

[New Co] will contact any of these

agencies, or any other agency not listed,

upon your request. Selection of this

agency is your responsibility or that of

your family, unless your insurance

company, health plan, HMO, or

physician (because of special needs)

require you to use a particular agency.

Basic information on each agency will

be provided to assist you in your

decision.

Choice of Provider: Include Agency Name,

Address and Phone Number

1. Home Health Agency: lllllllll

2. Equipment Provider: llllllllll

3. Other: llllllllllllllll

Reason for Choice: Check all that apply

llPrevious Relationship with Home Health

Company

llPatient/Family Preference

llInsurance Provider Directive

llDoctor Recommendation/Directive

Explain: llll

llHospital Recommendation/Directive

Explain: llll

llOther Explain: llll

llPatient/Family No Preference (see below)

In the event that you or your family

do not have a preference from the

attached list of available agencies, [New

Co] can provide this service if you so

desire. However, you should be assured

that no such referral is required and that

any agency which you desire will be

contacted on your behalf. Your selection

of an agency other than [New Co] will

in no way affect your care at [New Co]

or prevent you from receiving future

care at [New Co].

I have had the opportunity to review

information related to home health care

services and have had my questions

answered to my satisfaction. My

selection is as indicated above.

lllllllllllllllllllll

Signature

lllllllllllllllllllll

Date

lllllllllllllllllllll

Relationship (if not patient)

Comments: lllllllllllllll

(If unable to obtain signature)

Person Completing This Form: llllll

Commonwealth of Pennsylvania, Office of

Attorney General, Harrisburg, PA 17120

For Immediate Release—Thursday, July 20,

1995.

Contact: Jack J. Lewis, Assistant Press

Secretary, 717–787–5211 (home: 657–9840).

(Also released via RP Newswire in Central

PA.)

HARRISBURG—The Office of Attorney

General has approved the Harrisburg

Hospital-Polyclinic Medical Center merger

‘‘because we have it guaranteed—in

writing—that at least $56 million in savings

will be passed on to consumers,’’ Acting

Attorney General Walter W. Cohen

announced today.

Cohen said a proposed settlement

negotiated by the Attorney General’s office

addresses antitrust concerns sparked by the

planned merger of Capital Health System

(CHS), corporate parent of both Harrisburg

Hospital and Seidle Memorial Hospital, with

Polyclinic Health System (PHS), corporate

parent of Polyclinic Medical Center.

Both Harrisburg Hospital and Polyclinic

Medical Center are in Harrisburg; Seidle

Memorial Hospital is in Mechanicsburg.

We have negotiated a carefully structured

plan that mandates cost savings and—most

importantly—guarantees that those savings

will be passed on to consumers,’’ Cohen said.

‘‘We’ve also ensured that the new system

to be created by this merger will not use its

market power to create an unfair advantage

over others in the marketplace, health care

providers and health plans.

‘‘Without the safeguards included in this

agreement, the proposed consolidation of

these two health-care systems would have

raised significant concerns about the effects

on health-care competition in the Capitol

area. With these safeguards, we are

convinced that this merger will benefit not

only the hospitals but also—and this is our

bottom line—the people who live in the

Harrisburg area.’’

Cohen announced the settlement at a news

conference also attended by John S. Cramer,

CHS president and chief executive officer,

and Stephen H. Franklin, PHS president and

chief executive officer.

The proposal will be submitted to the

Federal Trade Commission for its review,

Cohen said. If the FTC agrees to defer

jurisdiction to the state, the agreement will

be filed in U.S. District Court for the Middle

District of Pennsylvania for court approval.

Cohen said the proposed settlement

requires the new health-care system to

achieve at least $70 million in net cost

savings within the first five years after

implementation of the merger.

Of that amount, he said, $56 million in

savings must be passed on to consumers in

the form of free or reduced-cost health-care

programs or through adjustments of prices

charged for existing services. He noted that

cost variables will be monitored by the

Attorney General’s office.

If the targeted $70 million cost-savings

figure is not reached five years after

implementation of the merger, the settlement

requires the new health system to pay $70

million minus the actual achieved savings to

a fund established by the Attorney General’s

office, Cohen said.

‘‘The fund would be used to supply free or

low-cost services such as child

immunizations, mammograms, and drug and

alcohol abuse treatment programs to

residents of Cumberland, Dauphin and Perry

counties,’’ he said.

Chief Deputy Attorney General Carl S.

Hisiro, who heads the Attorney General’s
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29827

Antitrust Section, said the section

interviewed dozens of doctors, health-care

insurers, ancillary care providers, personnel

from other hospitals, and others in the

community during the investigation.

‘‘This agreement responds to many of the

anticompetitive concerns raised by those

individuals,’’ Hisiro said.

The proposed settlement requires the new

system to hold overall price increases to

changes in the Consumer Price Index-Urban,

plus 2 percent, for at least five years. ‘‘This

guarantees that there will be no drastic price

increases for consumers in the wake of the

merger,’’ Hisiro said.

The proposal also requires CHS to sell

Capital Health Products, its durable medical

equipment company, to a third-party buyer

within one year.

The new system can’t require patients to

buy home health-care services from any

company affiliated with the new system, and

it must provide patients with information

about all accredited home health-care

agencies in the area, according to the

agreement.

Cohen said other provisions included in

the settlement which are designed to protect

consumers against possible anticompetitive

effects of the merger include:

—During its first five years, the new system

is prohibited—with certain defined

exceptions—from employing more than 20

percent of the physicians in Cumberland,

Dauphin and Perry counties practicing in

family medicine/internal medicine,

pediatrics, and obstetrics/gynecology.

—The new system cannot bar independent

physicians who are members of any

physician-hospital network established by

the new system from participating in other

physician-hospital networks or health

plans.

—The new system is prohibited from

entering into an exclusive contract or

providing special benefits to any single

health plan. The system must negotiate in

good faith with all health plans serving the

Capitol area.

—The new system is barred in most cases

from entering into exclusive contracts with

health-care providers.

Cohen said that if the new system

participates in Health Central Inc., a

managed-care plan proposed by six south

central Pennsylvania hospitals including

CHS, the settlement requires that the system

participate only on nonexclusive terms.

‘‘The new system is barred from giving this

plan any price breaks not offered to other

plans, and the system cannot subsidize

Health Central through its own revenues in

any anticompetitive manner,’’ Cohen said.

Under terms of the settlement, the new

system cannot—without prior approval of the

Attorney General’s office—acquire or be

acquired by ‘‘any indemnity plan, health

maintenance organization, or hospital in

Cumberland, Dauphin or Perry counties.’’

Cohen said that for five years after the

merger takes place, the new system must

submit annual reports to the Attorney

General’s office describing the system’s

compliance with the eventual final judgment

of the court.

Cohen said the term of the settlement is 10

years, although the parties can petition the

court to end it after five years if the system

has complied with the terms at that time.

In concluding the investigation, Cohen

stressed that officials of both CHS and PHS

cooperated fully with the investigation. He

commended Hisiro and Senior Deputy

Attorney General James A. Donahue III for

their roles in negotiating the proposed

settlement.

Shepard’s Crook Nursing Agency, Inc.

P.O. Box 2234, Pampa, Texas 79066, Phone

806/665–0356

November 27, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. St., N.W., Room 9300,

Washington, D.C. 20530

Regarding: United States v. Healthchoice of

Northwest Missouri, Inc.

The main objective in managed health care

and the referral system is providing good care

for the patient. Variations in agencies are

most evident in quality of care and skills of

the staff.

Any regulation that restricts patients

choices lowers the quality of care the patient

receives for the dollar spent.

The Columbia hospital administrator in

Pampa, Texas told Shepard’s Agency he did

not intend to refer to anyone and wanted all

the other agencies in town gone. He wanted

all the business. Many of our patients were

forced by the hospital to use the hospital

home health while requesting another

agency. Many hospitals are now practicing

the regulation proposed. The result is evident

in patient dissatisfaction and reduced quality

of care.

The patient should be treated as a customer

of services and not a captive of the discharge

planner.

A great majority of patients requiring home

health are the elderly. This is a group which

has difficulty making demands for a choice.

Their rights are usually the ones most

abused.

A system which is based on self-referral to

the hospital based agency is set up for fraud

and abuse. This will result in accelerated

utilization, and high cost to Medicare.

Hospitals have a great need to shift Medicare

money to hospital expenses and increase

hospital profit. Due to this practice, freestanding agencies can provide home health

cheaper than hospital based agencies.

Hospitals should be required by law to

offer patient choices. Agencies should be

allowed to visit their patients at the hospital

to arrange plans on discharge. If the patient

has no preference, referrals should be rotated.

This is a critical time in Health Care.

Caution must prevail to lower cost. Giving

the hospitals more control over care after

leaving the hospital is step in the wrong

direction. Protecting patients rights’ will help

lower medical cost.

The patient should be asked if they have

been served by a home health agency. If the

patient says at this point yes, they should be

asked if they wish to remain. Only if the

patient states they do not choose to stay with

the same agencies should other agencies be

offered. Switching a patient to another

agency increases cost in repetitive health care

teachings. This should be done only at the

patient’s choice. The patient should have the

right to control his own health care. Please

find enclosed documented complaints from

patients and Shepard’s Nursing Home Health

on the Columbia Hospital referral system to

their home health agency.

Further information is available.

Sincerely,

Suzanne Wilkinson,

Administrator/Owner, Shepard’s Crook

Nursing Agency, Inc.

Fayette County Health Department

P.O. Box 340, South Fifth and Edwards St.,

Vandalia, IL 62471, (618) 283–1044

December 1, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St. NW., Room 9300, Washington,

DC 20530

Re: Proposed final judgment for United States

v. Health Choice of Northwest Missouri,

Inc., et al., Case No. 95–6171–CV–SJ–6 in

the U.S. District Court for the Western

District of Missouri

Dear Ms. Kursh: As a freestanding Home

Health Agency we are very concerned about

the referral policy which is open for

comment at this time.

While technically the patient is being given

a choice of which agency receives the

referral, we do not feel it is an informed

choice. When a patient/family is under the

stress of hospitalization, they are very

susceptible to nuances and recommendations

of the discharge planner. The following

situation illustrates my point.

Where Will They Eat?

Characters: Innkeeper, Mr. Miles, traveler,

Companion.

Scene: Hotel lobby check-out desk.

Time: 12:00 noon.

Situation: Traveler and companion are

checking out of the hotel and anxious to get

on their way, but are hungry.

Innkeeper: Thank you so much for staying

with us, Mr. Miles. I hope every thing was

satisfactory. It is noon and you will be

needing lunch soon. Do you have a

preference for where you eat?

Traveler: No, but we are hungry and

unfamiliar with the area. Pizza sounds good.

Innkeeper: We have an excellent eatery

across the lobby. Our chef is Italian and the

pizza is superb. We were recently evaluated

by Tasters Delight and received a 10 (Smile).

You can’t get better than that! (Hands traveler

a menu.)

Traveler: Oh, that pizza looks wonderful,

but I don’t know. We thought we might go

down the road a bit. Are there any other

places?

Innkeeper: Oh yes, but I can’t make a

recommendation. You can check the

telephone book.

Traveler: Well . . . gee . . . I don’t have

my reading glasses . . .

(Innkeeper stands there saying nothing)
29828 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Traveler: Can you just tell me the names

of other pizza places?

Innkeeper: Yes, I can, but be sure you

understand that I have never eaten at these

places and really don’t know anything about

them, but they are The Pizza Place, Papa’s

Pizza, and All You Can Eat Family Pizza

Place. Now remember, I can’t speak about the

quality of their food like I can about our

restaurant, but you certainly don’t have to eat

here. The choice is yours.

Traveler: (Turning to companion) What do

you think?

Companion: Oh, I don’t know. It’s been a

long trip and I’m anxious to get to our

destination. I wonder if it really matters.

Innkeeper: Let me reassure you that our

restaurant is top quality. I hear lots of great

comments from the patrons as they leave.

Look on the wall. There is a newspaper

article written up just last month.

Traveler: Well, we were certainly pleased

with our room so if you say your food is good

I guess we better have lunch here.

Scene closes with traveler and companion

walking across lobby into the hotel

restaurant.

Curtain.

Were the travelers given enough

information to make an informed decision?

Where would you eat?

I urge you to find these referral policies

unacceptable.

Thank you.

Very truly yours,

Cara Kelly,

Administrator.

Metro Home Health Care Services, Inc.

‘‘THE HELPING HANDS OF CARING

PROFESSIONALS’’

November 27, 1995,

Ms. Gail Kursh,

Chief, Professionals & Intellectual Property,

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street NW, Room 9300,

Washington, DC 20530

RE: ‘‘United States v. Health Choice of

Northwest Missouri, Inc., et al., Case

Number 95–6171–CV–SJ–6

Dear Ms. Kursh: Per the attached:

1. Referring to II B(2): How does the DOJ

know that Heartland is an excellent home

care agency? A hospital near us opened an

agency. We were the best, VNA the second

best and theirs was third best. The hospital

CEO said all referrals go to the third best

agency, their own.

2. Heartland’s agency may be the most

expensive. PROPAC stated hospitals cost an

average of $15.00 more per visit. Should

patients be referred to cost effective agencies

and not just the one owned by the hospital?

3. Hospitals have been referring to agencies

for thirty years. When they start their own

agency, do they all of a sudden become deaf

and dumb as to what agencies are good and

which aren’t in their community? Discharge

planners’ jobs should be to refer patients to

quality services regardless of ownership and

NOT in regard to how much money the

referring entity can make off the referral.

4. Doesn’t it seem a bit harsh for the DOJ

to suggest that hospitals tell 85 year old sick

patients who are quickly being discharged

home without support to go to the phone

book to find a provider if they don’t take the

hospital program? Is that giving the patient

a choice?

Sick, elderly patients depend on others to

give non-biased advice for their care. Please

allow that to continue.

Thank you.

Sincerely,

Richard A. Porter,

President/Administrator, Metro Home Health

Care Services.

James F. Wayne

Account Executive, Quantum Health

Resources, 350 Cordelia Way, Walnut Creek,

CA. 94596, (510) 942–0747

November 25, 1995

Ms. Gail Kursh,

Chief, Professionals & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St.,

N.W., Room 9300, Washington, D.C.

20530

Subject: United States v. Health Choice of

Northwest Missouri Inc., et al. Case No.

95–6171–CV–SJ–6 (U.S. District Court,

Western District of Missouri)

Invited Comments regarding the above case

from the D.O.J. on the proposed final

judgment (Ref: Home Health line 11300

Rockville Pike #1100 Rockville MD 20852–

3030):

Ancillary Service Referrals

If a patient does not accept the provider

recommended by their personal physician

then the patient shall be referred back to his

or her physician to discuss alternatives to

make a joint/collaborative decision.

A patient needs to direct his or her

concerns about a physician’s choice of

ancillary service provider and resolve the

matter with the physician prior to next step

in process. Additional service providers can

be discussed and the appropriateness of the

additional alternatives can be weighed.

Should the physician and patient disagree

with the initial selection, and mutually

determine that the chosen provider does not

meet the needs of the patient, an alternative

provider shall be chosen. The patient shall be

redirected to the hospital social worker/

discharge planner with the new

recommendation.

Timely Ancillary Provider Selection

The physician must enable a patient the

opportunity to make a timely and appropriate

selection to meet his or her specific needs

prior to discharge. Should ancillary provider

selection be a part of the post-hospitalization

treatment strategy then early decisions (e.g.

prior to hospitalization) should be

considered. This diligence will be mutually

beneficial to both physician and patient.

Physician/Patient Collaboration in Provider

Selection

A patient with a high-risk chronic disease,

for example, one whose needs are unique and

potentially multi-system in nature, may

require an ancillary service provider with

specialized expertise, experience and

understanding to meet the highest

expectations of quality and safety in caring

for that specific disorder. Therefore,

physician/patient collaboration must take

place as a first step in selecting an

appropriate provider. Collaboration

encourages proactive planning jointly by

both hospital based utilization review

personnel and families affected by the

illness.

Provider Selection Process: Suggested

Criteria

1. Clinical specialization in patient’s

medical condition: The agency rendering the

ancillary service shall be recognized by the

local medical community as a specialty

service with experience and business

resources appropriate to the needs of the

patient(s) being referred.

2. Accreditation by a joint commission

authority: The agency rendering the ancillary

service be approved and licensed by a State

or Federal agency, i.e., Joint Commission on

Accreditation of Home Health Agencies.

3. Physician’s ancillary provider selection

must be based on ‘‘plan of care’’ established

to treat and monitor patient’s therapy: The

referring physician should have a knowledge

of the company servicing the patient,

including quality of service and abilities of

the company to meet all plan of care

requirements. A necessary requirement is

that the ancillary provider must have

experience and understanding of the disease

state. The selection goal is focussed to match

the patient’s condition to the service

provider’s specialty and clinical ability to

execute the ‘‘plan of care’’.

4. Current ancillary provider shall be

notified on admission of their patient by

hospital utilization department. Current

service providers having relationship with

patient shall be given notification that patient

has been admitted. Immediate steps can be

taken to proactively revise plan of care at

expected date of discharge. Home provider

will have opportunity to discuss any changed

orders with physician and follow the

progress of the patient (i.e. concurrent

review) until discharge orders are rendered.

Thank you for this opportunity to

make comments,

James Wayne

Family Nurse Care

9880 E. Grand River, Suite 110, Brighton, MI

48116, (810) 229–0300

November 21, 1995.

Ms. Gail Kursh,

Chief, Professions and Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. St.,

NW., Room 9300, Washington DC 20530

Dear Ms. Kursh: I am writing to you as the

owner of a Medicare certified home care

agency and delegate to the White House

Conference on Small Business. My agency

has serviced Livingston County since 1987,

receiving referrals from hospitals in four

surrounding counties as well as Livingston

County.

In April of this year, the only hospital in

the county became affiliated with a multihospital organization and our referrals

decreased 30%. The Medical Director of this
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29829

hospital states that they are mandated to refer

to their own hospital-based home health

agency. The discharge planners state that

they must refer to their own agency. One of

our patients asked for our services,

presenting a magnet with our telephone

number on it and she was refused access to

return to our agency. The patient states that

she was too sick to argue.

The law is very clear: ‘‘Any individual

entitled to insurance benefits under this title

(42 USCS 1395 et seq.) may obtain health

services from any institution, agency, or

person qualified to participate under this title

(42 USCS 1395 et seq.) if such institution,

agency, or person undertakes to provide him

such services’’; yet hospitals across the

United States are engaged in this practice.

Because hospitals have traditionally lost

money over the years, they have targeted

home care as an area where they can shift

hospital costs and keep the client in a closed

system. There are plenty of sick, elderly

people in this country and the small, nurseowned agencies that offer community-based

care are being threatened out of existence

because of this practice.

I urge you to consider the fact that small

businesses are the engine that drives the U.S.

economy, and consider the following in your

final judgement:

* Bigger is not always better where health

care is concerned.

* Set limitations on hospital’s ability to

refer to clients to their own hospital-based

components.

* Require the hospital to use a rotation

system, which assures equitable referrals to

all providers in the area.

* Require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and to

expose the patient population to the

availability of outside services as well.

* Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely,

Marilyn LeVasseur, M.S., R.N.,

Administrator.

Infusion Management Systems, Inc. dba

Concepts of Care

December 1, 1995

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, 600 E St. N.W.,

Room 9300, Washington, D.C. 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al. Case No.

95–6171–DV–SJ–6

Dear Ms. Gail Kursh: My name is Sandra

Smith Jackson and I am employed as Vice

President of the Continuous Quality

Improvement Department for a Home and

Community Support Agency which has 30

medicare certified agencies across Texas. Our

locations are freestanding and we have been

providing care for 27 years.

Our Agency will be adversely affected by

the proposed final judgment for United States

v. Health Choice of Northwest Missouri, Inc.,

et al. This decision does not encourage fair

competition or patient choice. The hospital

would be able to monopolize all the ancillary

services. Heartland would present

information regarding its service without

making any mention of other providers in the

community unless the patient specifically

asked. If the patient asked they would be told

to look in the telephone book. I’m not aware

of a lot of hospitalized clients that would

look for a listing of providers in the

telephone book. It would be difficult for a

patient who had no preference to make an

informed choice if the discharge planner only

gives them a brochure for the hospital.

I believe as well as our state association

(Texas Association of Home Care) that

agencies shall not engage in coercive or

unreasonably restrictive exclusionary

behavior which would restrict or impede

consumer choice of provider agencies. An

agency or related entity that provides a

screen to clients for home care referrals shall

not use that position to influence a client’s

choice and to direct referrals to itself, and

shall inform clients of the availability of

home care providers and advise clients that

they have the right to choose the provider

they prefer. I also believe that agencies

should cooperate to see that patient gets the

best comprehensive service.

Thank you for allowing me the opportunity

to give comments in this matter. I have

enclosed a business card if you have any

questions.

Sincerely,

Sandra Smith Jackson,

Vice President, CQI/Licensure and

Certification.

Visiting Nurse Associations of Pennsylvania

1789 S. Braddock Avenue, P.O. Box 82550,

Pittsburgh, PA 15218, (412) 256–6927

November 29, 1995

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Antitrust Division, U.S. Department of

Justice, 600 E. Street, N.W., Room 9300,

Washington, D.C. 20530

Re: United States v. Heartland Health

Systems Inc., Civil Action No. 95–6171–CV–

SJ–6

Dear Ms. Kursh: We are writing in support

of the letter which you received from VNA

HealthCare Services dated November 24,

1995. Visiting Nurse Associations of

Pennsylvania is a membership organization

which includes 33 community-based, nonprofit home health agencies serving the entire

state of Pennsylvania.

Our members believe that the ‘‘Referral

Policy’’ contained in the Final Consent

Judgement against Heartland Health Systems

Inc. will be used by hospitals to deny

patients ‘‘freedom of choice’’ of a home

health care provider. It is our experience that

hospitals steer patients to their affiliated

home care agency. This tied relationship

restrains our members from competing on a

‘‘level playing field.’’

The ‘‘Referral Policy’’ in question should

be modified to send a strong message to

hospitals that they must abide by both

Medicare and Medicaid laws and federal

antitrust statutes.

Thank you for your consideration of our

concerns.

Respectfully yours,

Mahlon Fiscel,

President.

Visiting Nurse Association of Greater

Philadelphia

December 1, 1995

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force

Antitrust Division, U.S. Department of

Justice, 600 E. Street, NW., Room 9300,

Washington, DC 20530

Re: United States v. Heartland Health

Systems Inc. Civil Action No. 95–6171–

CV–SJ–6

Dear Ms. Kursh: I am writing to urge that

the Justice Department not consent to the

proposed final judgment in the abovereferenced case, because the ‘‘Referral

Policy’’ regarding provision of home health

care does not adequately protect patient

choice and fair competition.

The VNA of Greater Philadelphia is the

largest home health agency in Pennsylvania.

We are a non-profit, community-based

agency which has served communities in

southeastern Pennsylvania, including the

City of Philadelphia, for 110 years. We

provide home health services to

approximately 2,000 patients a day, many of

whom are Medicare and/or Medicaid patients

referred for care directly following an

episode of hospitalization.

Patient choice and fair competition are

protected by both Medicare and Medicaid

law and by antitrust provisions. The

proposed Heartland referral policy

undermines these protections. Heartland

would have no obligation to provide

reasonable information about other home

health providers in the community for

patients who have expressed no provider

preference. Telling a hospitalized patient that

there are other providers listed in the

telephone book and then giving the patient

‘‘time to investigate’’, all in the context of the

Heartland representative extolling the virtues

of its home health service, clearly encourages

steering patients to the hospital-owned

agency. Further, a policy of stonewalling

patient’s requests for information about other

providers, places the discharge planning staff

in the position of denying knowledge that

they actually have about alternate providers.

This clearly undermines continuity of care

for patients.

Although the Heartland consent decree

may have no formal precedential impact, in

practice this decree could have far-reaching,

negative impact on patients and on

independent providers, including visiting

nurse associations, because it would send a

clear signal that anti-trust and patient choice

protections are no longer to be taken

seriously.

We urge that you require a more aggressive

policy to assure that vulnerable, hospitalized

patients truly have access to the information

they need to make an informed choice of

their home health provider.
29830 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Sincerely,

Stephen W. Holt.

Gardner, Carton & Douglas

1301 K Street, N.W., Suite 900, East Tower,

Washington, D.C. 20005, (202) 408–7100,

Facsimile: (202) 289–1504

December 1, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force, U.S.

Department of Justice, Antitrust Division,

600 E Street, N.W., Room 9300,

Washington, D.C. 20530

Re: Comments—United States v. Health

Choice of Northwest Missouri, Inc., et

al., Case No.: 95–6171–CV–SJ–6

Dear Ms. Kursh: The law firm of Gardner,

Carton & Douglas is pleased to submit

comments in response to the proposed final

judgment in the above-captioned case

published in the October 3, 1995, Federal

Register (60 F.R. 51808). These comments are

filed on behalf of an independent home

health care company (the ‘‘Company’’)

located in the Southeast. The Company

furnishes over 100,000 home health visits per

year and has been in operation since 1985.

The Company has four locations and

employs over 120 individuals.

During the last three years, the Company

has seen many of the hospitals within the

Company’s service areas promulgate various

exclusionary policies favoring referrals of

hospital inpatient to hospital-based or

hospital-owned home health agencies and

other hospital affiliated ancillary providers.

Such policies typically prohibit outside

agency personnel from hospital floors and

encourage discharge planners’ referral of

hospital patients to hospital providers. The

proposed final judgment appears to endorse

and encourage such exclusionary practices

and, therefore, fails to protect the public

interest and should be revised to adequately

protect patient freedom of choice and fair

competition. The Company comments more

specifically as follows:

1. The Proposed Policy Is Contrary to the

Public Interest Because It Is Anti-Competitive

While the Company appreciates that the

main focus of the underlying litigation in

Health Choice was not the hospital’s referral

policies, implementation of the ancillary

service referral policy set forth in the

proposed final judgment would limit outside

providers’ and suppliers’ access to hospital

patients in favor of a hospital’s own ancillary

providers. That is, the policy, as drafted,

would permit and encourage use of the

hospital’s market power in an exclusionary

manner to the detriment of smaller ancillary

providers and patients.

Hence, the Company’s first concern is that

the proposed policy is inconsistent with

federal antitrust policy in that it excludes

competing ancillary providers from hospital

patients. (See, e.g., Key Enterprises Of

Delaware, Inc. v. Venice Hospital, 919 F.2d

1550 (11th Cir. 1990)).

Under Section II(B)(2) of the proposed

policy, the hospital may in effect steer

patients to its own ancillary providers

because it must only inform a patient of

alternative providers when hospital services

are first denied by the patient. Then, the

hospital must only direct the patient to a

phone book (Section II(B)(3)) to identify

alternate ancillary providers. This system

ignores the realities of the hospital-patient

relationship, and will unreasonably restrict

competition by limiting patient choice. The

Venice Court noted that ‘‘patients know very

little about ancillary providers,’’ described a

patient’s freedom of choice under similar

circumstances as ‘‘illusory,’’ and concluded

that ‘‘[i]t therefore becomes very easy to

channel patient choice by limiting the

patient’s exposure to competition.’’ 919 F.2d

at 1557. Because the proposed policy grants

a privileged status to the hospital’s providers,

it interferes with fair competition among the

range of ancillary providers available to the

patients. For this reason, the policy, as

drafted, is contrary to the public interest.

2. The Proposed Policy Is Contrary to the

Public Interest Because It Violates Patient

Freedom of Choice

The proposed policy also is contrary to the

public interest in that it violates the freedom

of choice provisions of the Medicare statute.

Pursuant to section 1802 of the Social

Security Act, ‘‘[a]ny individual entitled to

insurance benefits under this title may obtain

health services from any institution,

agencies, or person qualified to participate

under this title if such institution, agencies,

or person undertakes to provide him such

services.’’ 42 U.S.C. § 1395a. A parallel

provision applies to Medicaid recipients. 42

U.S.C. § 1396a(23).

While this federal ‘‘right to choose’’ inures

to the benefit of patients (i.e., Medicare

beneficiaries and Medicaid recipients) rather

than providers, patients denied the option of

securing home health and other ancillary

care services from any entities other than the

hospital’s agencies are materially harmed.

The draft ancillary provider referral policy

deprives patients of information necessary

for a patient to choose among providers and

to actively participate in his or her own

health care. It also substantially hinders

providers’ ability to compete for patients

based on cost, quality of care, and other

objective criteria relevant to a patient’s

choice. Moreover, as this ‘‘right to choose’’ is

a fundamental principle underlying the

administration of the Medicare and Medicaid

programs, denial of such rights by a hospital

in accordance with the proposed policy

could jeopardize the hospital’s status as a

Medicare or Medicaid provider.

The Company also notes that the Inspector

General (‘‘IG’’) of the U.S. Department of

Health and Human Services recently deemed

hospital self-referral policies as ‘‘suspect.’’ As

a result, as part of the IG’s 1996 Operation

Restore Trust Workplan, she will review

hospital discharge planning to determine the

extent to which financial conflicts of interest,

such as hospital ownership of ancillary

providers, negatively affects effective

hospital discharge planning and patient

choice. The Company urges the Department

of Justice to coordinate with the IG to

develop one consistent policy.

3. Recommendations

Our client agrees that where the patient’s

physician specifies a particular ancillary

provider in the treatment order, that order

should be honored, where consistent with

the patient’s wishes. Also, where a patient

expresses a clear preference for a particular

ancillary provider, based on reputation,

previous experience, health insurance

coverage, or other competitive factors, that

preference should be honored. However,

where neither the physician nor the patient

expresses such a choice, the hospital

ancillary provider should not enjoy a

preferred status over all other ancillary

providers. The Company therefore suggests

the following revisions to bring the proposed

policy within the public interest:

A. Prior to patient discharge, the hospital

should be required to furnish to its patients

a current list of all certified or otherwise

licensed ancillary providers within its

service area. Such a list should include the

hospital’s providers. The hospital need not

be charged with responsibility of verifying or

guaranteeing the services of listed providers,

and appropriate disclosure language may

appear on the list.

B. Hospital personnel should not

influence, steer or otherwise interfere with

patient freedom of choice by directing a

patient’s referral to (or away from) any

particular provider on the list. Independent

ancillary providers should be treated the

same as the hospital’s providers under the

policy to prevent the hospital from

channeling patients.

C. The policy should clarify that the

hospital should continue to permit

representatives of nonhospital ancillary

providers on its floors, to the extent

consistent with patient health and safety, to

coordinate the continuing care of referred

patients, and to educate physicians and

patients of available nonhospital services.

The hospital should not block outside

ancillary providers’ access to physicians,

discharge planners, and patients.

D. Last, because the draft policy is largely

self-enforcing, the hospital should maintain

and make available for public review and

verification its records of referrals to

ancillary providers.

We are grateful for your consideration of

these issues and are pleased to participate in

the development of the final judgment.

Please do not hesitate to contact me if you

have any questions or require additional

information.

Very truly yours,

Christopher L. White.

Illinois Homecare Council

Nation’s First Homecare Association

November 28, 1995

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

Dear Ms. Kursh: The Illinois Home Care

Council is a state-wide trade organization

serving the needs of home care providers and

suppliers in Illinois. IHCC represents 350

members, including over 250 providers

serving more than 125,000 Illinois citizens in

their homes. We believe that one of our most
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29831

important roles is to speak for the consumers

of our services, individuals who, for reasons

of age or infirmity, are often unable to speak

for themselves.

We are writing to you to express concerns

about the proposed consent decree in United

States v. Health Choice of Northwest

Missouri, Inc., et al., with our attention fixed

firmly on the consumers of our services. As

a trade organization, our membership

includes home health providers of every

type: from not-for-profit visiting nurses

associations to proprietary chains. We also

count among our members many hospitalbased home health agencies. Competition is

stiff in our state, and sometimes disputes

arise among local providers trying to get

access to patient referral sources. From that

standpoint, we welcome the efforts of the

Justice Department to clarify the role of the

hospital discharge planner in a facility which

offers ancillary services. We also strongly

support the need for Medicare recipients, and

indeed every home care consumer, to

exercise free choice in selecting a home care

or other ancilliary service provider.

It is our focus on patients that raises

concerns about some of the provisions

included in your proposed consent decree,

specifically about the Referral Policy

presented on page 51812 of the October 3,

1995 Federal Register. We fear that the

Justice Department may not fully recognize

the speed with which today’s patient is

admitted to, treated in and discharged from

the hospital. Many of these patients are

elderly, and are sent home before they and

their families have fully grasped what has

happened to them and what they will need

on returning home. We believe that the

process outlined in Part II (3) of the proposed

Referral Policy will only serve to increase the

anxiety experienced by patients undergoing a

hospitalization, and potentially force them

into a bad decision. We also doubt whether

today’s average hospitalization provides

sufficient time for the patient to

independently examine all of his options and

arrive at a conclusion in time for the

discharge planner to plan a discharge. In

short, we believe that the proposed policy

places an unfair burden on vulnerable, sick

people. We are unable to see how it protects

patient choice or promotes quality care.

IHCC would like to recommend that Part

II (3) of the proposed Referral Policy be

eliminated and that Part II (2) be amended

with a requirement that hospital discharge

planning departments maintain a reasonably

up-to-date list of licensed ancillary service

providers, noting those that are Medicare

certified, and that these lists be provided to

every patient requiring post-discharge

ancillary services. We agree that hospital

discharge planners should not be forced into

evaluating each provider for the patient;

however, they should be aware of the

specialities of the various providers, and be

willing and able to inform the patients of

these specialties. Imparting information

about choices is central to the concept of

hospital discharge planning. We believe that

a focus on the patient and his or her needs

will make clear the best policy in this matter.

Thank you for this opportunity to comment

on the proposed consent decree. We

understand that the proposed settlement

technically applies only to the parties

involved. However, we also recognize the

precedent-setting nature of the acceptance of

such an interpretation of the Medicare

freedom of choice requirements by the

United States Department of Justice. We

believe that acceptance of the Referral Policy

language currently included in the proposed

consent decree will do a grave injustice to

hospitalized patients nationwide, and urge

you to revise the policy as described above.

Sincerely,

Monica Brahler,

President.

cc: Michael Kulczycki,

Pamela Steinbach,

Rebecca Friedman Zuber

November 3, 1995

Mrs. Marian Wilson,

Tiffany Square Convalescent Center, 3002 N.

18th Street, St. Joseph, Missouri 64505

Dear Mrs. Wilson: Although we have not

formally met, I have heard so many good

things about you that it seems as though I

know you. I know that David Cathcart has

talked to you about our interest in acquiring

other nursing facilities in St. Joseph, and that

you are going to take your time before making

any major decision. I have been talking to

David about this for nearly a year, and the

‘‘state of the industry’’ in St. Joseph has been

in a downward spiral during all that time.

Seeing you at the ‘‘Coalition’’ meeting tells

me that you too are concerned about the

future of our businesses. I believe we are at

the crossroads of survival today, and suspect

that either a facility will close, or an owner

will pump large amounts of cash into the

business to make it survive * * * for a little

longer.

Attached is a copy of a letter to David

Cathcart that briefly outlines our thoughts

and objectives. I believe it affords you an

opportunity to convert your interest into

cash, and it affords the new entity an

opportunity to make management decisions

for the good not only of the nursing homes,

but also for the good of the entire

community. I cannot imagine the amount of

good you have done in this

community * * * it has been tremendous.

But things in this industry are changing so

fast that unless we are changing at the same

time, we are falling further behind. The

requirement for electronic transfer of MDS

data to Jefferson City by next July 1 is one

major example. Maybe you are already at that

point too, but it took us over a year to become

able to do that computer transfer of data. And

the new survey process is no cake-walk.

I sincerely hope you will not be offended,

and that you will give serious consideration

to the content of this mailing. I will be happy

to meet with you at any time.

Sincerely,

Lowell Fox,

5051 Faraon 64506, 233–1212 (home), 279–

1591 (office).

Central Health Services, Inc.

6600 Powers Ferry Road, Atlanta, Georgia

30339, 404/644–6500

November 28, 1995

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, U.S.

Department of Justice, Antitrust Division,

600 E Street, N.W., Room 9300,

Washington, D.C. 20530

Re: Comments on Proposed Final

Judgement: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No. 95–

6171–CV–SJ–6 in the U.S. District Court for

the Western District of Missouri

Dear Ms. Kursh: As a home health care

provider I have first-hand knowledge of the

subject matter the Department of Justice is

dealing with in the above referenced matter.

I also understand the influence a hospital can

exert in a patient’s selection of post-hospital

ancillary services, including the selection of

a home health care provider. For these

reasons I have reviewed and studied the

DOJ’s recommended home health, DME and

hospice referral policy for Heartland

Hospital.

In the interest of protecting patient choice

(which is guaranteed by both Federal and

State laws) as well as maintaining fair

competition consistent with the antitrust

laws and FTC regulations, I respectfully

submit that the final proposed judgement

(recommended policy) be modified as such:

• Strengthen limitations on the hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to provide patients

with an updated list of Medicare/Medicaid

providers in the community;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers in the area;

• Require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and to

expose the patient population to the

availability of outside services as well;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

On behalf of our home health agency and

the patients we serve, we respectfully ask

that you give these comments due

consideration. These issues are of even more

concern in today’s era of health care and

provider consolidation.

Sincerely,

Jerry Sevy,

General Counsel.

Upper Peninsula Home Nursing

1414 W. Fair, Suite 44, Marquette, MI 49855,

906/225–4545

November 22, 1995.

Gail Kursh,
29832 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Chief, Professions and Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW

Room 9300, Washington DC 20530

Dear Ms. Kursh: The only word to describe

the DOJ’s recent decision in United States v.

Health Choice of Northwest Missouri, Inc. et

al., is: Devastating.

Private, non-hospital-based home health

care agencies already struggle with the

monopolistic practices of self-referring

hospital programs. This decision would in

effect nail the lid on the coffin of informed

choice for small community based programs

such as ours.

Add in a hospital’s ability to divert funds

to media advertising and the fact that such

advertising is disallowed under Medicare

cost settling and you eliminate any chance

for a private, non-hospital-based agency to

establish a level competitive field.

Asking hospital-based discharge planners

to ‘‘play fair’’ is at best naive, and more likely

is simply stupid. When a patient hears a

discharge planner state they ‘‘can not speak

to the quality of outside providers,’’ they will

actually hear: ‘‘therefore, the outside program

is no good.’’ That’s reality. Instead, the

Department of Justice should be encouraging

hospitals to mention ALL agencies who are

certified or accredited at the same level, or

higher, in their own community.

Let me offer a very good example in our

community. For almost twenty years,

Marquette County, in Michigan’s Upper

Peninsula, was served by two private home

health care agencies—U.P. Home Nursing &

Hospice and Northern Home Nursing. (The

area was also served by the small, countyoperated health department program.) In

1992, after we refused to sell to the local

hospital, Marquette General, the Hospital

bought our competing agency.

Instantly, the twenty-year policy of rotating

referrals was dropped. Instantly, our

hospital-generated referrals went from 45%

to less than 4%. Instantly, the U.P. Home

Nursing & Hospice discharge planning staff

were not allowed to speak to patients in the

hospital. In fact, even if a hospitalized

patient were already being seen by our

Agency, our staff were not allowed to speak

to them in the hospital without a signed

release, even if the patient and physician

requested us. Presently, the hospital is telling

our patients they are no longer in our care

but will have to make their home health

decision all over again upon discharge from

the hospital. Obviously, the hospital

influences their decision toward the

hospital’s own program.

As a final, and ridiculous, action, the

hospital imposed a form on patients that

included confusing language. The form

compelled them, upon admission, to disavow

any non-hospital based home health

providers, and this was presented as a

normal part of the multi-paged admissions

process.

This story is strong evidence that the

Department of Justice must include language

which addresses the hospital’s responsibility

to refer to Medicare-certified and accredited

programs. U.P. Home Nursing & Hospice has

been certified for twenty years through

Medicare without a single deficiency. For the

past three years, we have maintained

accreditation through CHAP—the

Community Health Accrediting Program.

This sterling accreditation offers us deemed

status for participation in Medicare, and we

achieved this high accreditation with an

unheard of 57 commendations on our first

application. For our local hospital to state

they can ‘‘not vouch for the quality of this

program’’ would be utterly unfounded and

even fraudulent. They are, indeed, well

aware of our high standards of quality. They

are also aware of our unique billing policy:

for needed home health services, we accept

third-party reimbursement as payment in

full. Patients are not directly billed. The

hospital can not claim this policy and by

limiting choice denies care to many in our

community who can not afford the hospital’s

18% interest rate on unpaid balances.

Your pending decision in the matter of

Heartland Health System, Inc. does not

include provisions which would protect the

private sector. Nor does it support informed

choice and anti-trust provisions in the

current law. We can understand the DOJ’s

desire to mandate some type of informed

choice for hospital-based programs. At

present, it seems there are none. But we

strongly urge you to consider the

modifications proposed by the St. Joseph

group, ‘‘Your Right to Choose:’’

fl Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

fl Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

fl Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers.

fl Make the hospital publicly post its

daily referrals to both its hospital-based

entities and to other providers in the

community.

The Department of Justice must consider

fair competitive practices in this matter. By

eliminating freedom of choice, you dilute

competition and, thereby, reduce quality and

cost-effectiveness in this growing method of

health care delivery.

Sincerely,

Cynthia A. Nyquist, R.N., B.S.N.,

Administrator/CEO.

North Woods Home Nursing & Hospice

P.O. Box 307, Manistique, MI 49854–0307,

(906) 341–6963, 800–852–3736

November 24, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. St.,

N.W., Room 9300, Washington, D.C.

20530

Dear Ms. Kursh: I am writing to you as the

owner/administrator of a Medicare certified

home health care agency. We have been in

operation since 1985. We have had

tremendous success with acceptance by our

local physicians. I have letters where they

laud our service as excellent.

Our regional medical center entered the

home health market about 3 years ago and

now 2 local hospitals opened agencies in

1994. We have maintained our market share,

although our growth has stopped. We looked

upon this increased competition with

concern, but also as a reason to do a better

and better job. We feel competition is good

for quality and efficiency.

The referrals from these hospitals and our

local doctors has practically dried up. The

doctor’s office (private physicians) office

gives patients a questionable choice

situation. The hospital owned physicians and

the referral process at the hospital prevents

us from receiving referrals, even when the

patient requests us. The patients call and tell

us they are ‘‘too sick to fight’’. This more

recent ‘‘bullying’’ of our infirm and elderly

will surely hamper our continued success.

My optimism of the goodness of people

and the upholding of fairness in our judicial

system is at question if this present referral

practice is allowed to continue. The majority

of our patients are served under the Medicare

system. Please review the patient rights

regulations under this program and also any

antitrust implications. I believe the problems

here border on basic ‘‘human rights’’

exploitation. Referrals should be based on

choice and a rotating system. Quality issues

are assured by MDPH hotline and CHAP

certifications, and in our very small town—

word of mouth!

Sincerely

Susan L. Bjorne,

Administrator.

Baylor Homecare

3200 W. Hwy. 22, Corsicana, Texas 75110,

(903) 872–5535

Lynn Gill, RN

Director of Operations, Baylor HomeCare,

3510 Crutcher Street, Dallas, Texas

75246

Gail Kursh,

Health Care Task Force, Department of

Justice, Antitrust Division, 600 E St,

N.W., Room 9300, Washington, D.C.

20530

Dear Ms. Kursh: This is a response to the

proposed final judgement for United States

vs. Health Choice of Northwest Missouri,

Inc., et al., Case Number 95–6171–CV–SJ–6

in the U.S. District Court for the Western

District of Missouri.

We agree that the referring agency/

discharge planner should not make a

recommendation for another provider. The

discharge planner is familiar with their own

facility’s home health agency, DME, etc., but

not the many other agencies available. Many

agencies have problems documented by

State/Medicare surveyors. These would not

be known by the discharge planner. If the

patient wants to choose another agency, it is

certainly their right. This transfers the

liability/responsibility to the patient to

research their options and make the choice.

If a patient is given a list of providers by the

discharge planner and an agency from the list

administers poor care, the hospital ultimately

could be held liable.

Patient preference should be honored.

However, the physician also has the right to
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29833

refuse to write orders to a certain agency

because of a history of poor care, over

utilization, etc. Then the patient must then

make a choice of either changing physicians

or changing agencies.

The proposed referral procedure certainly

honors patient choice and guards against

liability of the referring facility.

Sincerely,

Lynn Gill, RN,

Director of Operations, Baylor HomeCare.

Danville Regional Medical Center

142 South Main Street, Danville VA 24541

November 28, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

Room 9300, 600 E Street NW.,

Washington, DC 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6

Dear Ms. Kursh: I applaud the Department

of Justice on the recommended home health,

DME, and hospice referral policy in the

proposed settlement between the department

and Heartland Health System, Inc., of St.

Joseph, MO.

It is my opinion that the referral policy in

the proposed final judgment is fair and

equitable. A hospital should have no

responsibility to, in effect, promote outside

proprietary services with or without a

company specific physicians order.

Additionally, a hospital cannot be

responsible for seeming to tacitly approve of

the quality of care provided by outside

ancillary companies. If proprietary ancillary

service companies wish to enhance their

market share, they should do this by making

themselves the company of choice by

providing outstanding service, not by

demanding their name be mentioned

immediately upon mention of a home health,

DME, or hospice referral.

The policy in the proposed settlement

allows for true freedom of choice for patients

as it will tend to reduce reliance on company

name recognition. It has been my experience

that some patients and families tend to select

companies with high name recognition even

though services provided are unexceptional

or even sub-standard.

Once again, I wholeheartedly congratulate

the department on it’s reasonable, fair, and

common sense referral policy.

Very Sincerely,

William S. Sigmon, RN,

Director of Home Health.

Helix Health System

November 28, 1995

Gail Kursh,

Chief, Professions and Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, N.W., Room 9300,

Washington, D.C. 20530

Re: United States vs. Health Choice of

Northwest Missouri, Inc., et al, Case No.

95–6171–CV–SJ–6

Dear Ms. Kursh: I recently saw a copy of

the recommended home health, DME and

hospice referral policy for Heartland

Hospital.

I believe that your recommendation for the

approval of this referral policy strikes an

appropriate balance between right and

obligations of a hospital in connection with

its related home health and DME companies.

If I had to make any change in the form, it

would be to strike out the word ‘‘excellent’’

in subparagraph IIB2. I think that the

‘‘puffing’’ of its related services is

questionable. The remainder of the form is

both logical and sensible.

I totally agree with the concept that a

hospital should not be placed in a position

of having to refer to one or more outside

providers. It has no ability to judge the

quality or accessibility of the unrelated home

health or DME agencies. It does not have the

ability, and should not have the obligation,

to go through a ‘‘credentialling process’’ for

the outside agencies. I believe the formula

suggested in this document is the only

approach that a hospital can reasonably use.

Very truly yours,

Robert J. Ryan,

Vice President & General Counsel.

Center for Health Care Law

519 C Street, N.E., Stanton Park, Washington,

D.C. 20002–5809, (202) 547–5262 FAX: (202)

547–7126

December 4, 1995

Gail Kursh,

Chief Professionals and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, N.W., Room 9300,

Washington, D.C. 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Civil No.

95–6171–CV–SJ–6

Dear Ms. Kursh: These comments relate to

the proposed Final Judgment, Stipulation,

and Competitive Impact Statement that has

been filed with the United States District

Court for the Western District of Missouri in

the above entitled matter, as published in 60

Fed. Reg. 51808 (October 3, 1995). The

National Association for Home Care (NAHC),

representing the interests of over 6000 home

care providers and their patients,

recommends several modifications in the

proposed referral policy which is designed to

ensure patient choice.

Under 42 U.S.C. § 1395a, Medicare patients

are guaranteed free choice of a provider of

services. That statutory provision provides:

‘‘Any individual entitled to insurance

benefits under this title may obtained health

services from any institution, agency, or

person qualified to participate under this title

if such institution, agency, or person

undertakes to provide him such services.’’

A comparable provision exist under federal

Medicaid law, 42 U.S.C. § 1396a(a)(23) which

states:

‘‘Any individual eligible for medical

assistance (including drugs) may obtain such

assistance from any institution, agency,

community, pharmacy, or person, qualified

to perform the service or services required,

* * * who undertakes to provide him such

services.’’

It has long been the position of the

National Association for Home Care that

hospitals that participate in the Medicare and

Medicaid programs must provide for an

unencumbered freedom of choice for post

hospital care services as part of meeting their

discharge planning obligations. 42 C.F.R.

§ 482.21(b). In addition, NAHC believes that

compliance with the federal antitrust laws

requires hospitals and other parties within

the health care system to honor a patient’s

freedom of choice for the selection of care.

The proposed referral policy set forth for the

above entitled matter is a clear effort to

achieve those ends. However, we believe that

this referral policy should be strengthened in

a number of areas and clarified in others.

The most important alteration that should

occur in the referral policy is an expansion

of the standard for ancillary services referrals

to specifically include an application of the

policy to any party within the health system

that is in the position to affect a referral for

services. For example, many patients are

referred to home health services from

physicians, clinics, nursing facilities,

rehabilitation centers, as well as hospitals.

The referral policy should clearly state that

it applies to all parties within the health

system that are in a position to affect a

referral.

In addition, the proposed referral policy is

designed in a manner which offers true

freedom of choice only after the health

system is allowed to market its ancillary

services to the patient. We would

recommend that the referral policy be

modified to provide that when an ancillary

service has been ordered and a provider

specified, the referring person be obligated to

inform the patient that he or she does not

have to use that provider but may choose any

provider he or she wants. Moreover, the

referring person should be obligated

simultaneously to provide information to the

patient regarding the availability of other

providers in the community. Similarly, when

the doctor has not specified a particular

provider and the patient has no preference as

to provider, the referring person should be

obligated to provide information regarding

the availability of other providers in the

community. A patient cannot made an

informed choice unless such information is

provided. The referring person is in a

position to provide such information. A

patient should not be required to reject the

doctor’s specified provider or Heartland’s

ancillary services or ask what other providers

are available before the referring person

provides information regarding the

availability of ancillary services in the

community.

In terms of providing information, NAHC

recommends that the referral policy be

modified to require that the referring person

offer a list of available providers which

includes, but is not limited to, those

providers listed in a telephone book.

Specifically, with respect to home health and

hospice services, NAHC would recommend

that the health system secure an up-to-date

listing of certified providers on a quarterly

basis and make this list available to patients.
29834 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Finally, we are concerned that the referral

policy allows for a marketing effort within

Heartland that could result in undue

influence over an individual’s choice of

ancillary service providers. Many patients are

not aware of alternative providers that may

be available in their community. Particularly

in an inpatient setting, they are in a captive

environment where marketing could result in

inappropriate steering or coercing of patients

into Heartland’s own ancillary service

providers. The referral policy should impose

some restraints on the marketing activity.

That restraint would not require that the

health system open its doors to marketing

efforts by competing ancillary service

providers. Instead, it should focus on the

degree of access to the patient by the

ancillary service providers or a party within

the health system acting on their behalf.

Limiting the marketing efforts to an

expression of the availability of an accredited

ancillary service available to the patient with

a brochure should provide a sufficient

protection.

NAHC appreciates the opportunity to

provide comment on this matter. It is

anticipated that the final referral policy will

be utilized by health systems and other

provider facilities across the country as a

basis for determining whether their activities

comply with federal antitrust laws.

Accordingly, it is advisable that the

Department of Justice ensure that it is

established in a manner which appropriately

and comprehensively achieves patient

freedom of choice.

Very truly yours,

William A Dombi

Approve Home Medical Services, Inc.,

2000 E. Harrison St., Suite E, Batesville, AR

72501, (501) 698–1123, (800) 822–8232, Fax

(501) 698–1044

December 2, 1995

Gail Kursh,

Chief, Professional & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St., NW., Room 9300, Washington,

DC 20530

Re: U.S. v. Health Choice of Northwest

Missouri, Inc., et al. Case No. 95–6171–

CV–SJ–6 in the U.S. District Court for the

Western District of Missouri.

Dear Ms. Kursh: As I was catching up on

my reading of professional journals and

newsletters this past week, I happened on to

an article in Home Health Line newsletter

dated 11–13–95 that disturbed me greatly. I

am an owner of an independent free standing

home health agency that is currently fighting

the unfair discharge practices of our local

hospital much as must be the case in St.

Joseph, Missouri with Heartland Hospital.

I was totally appalled that the Department

of Justice was considering endorsing such a

biased and unfair referral policy as the one

described in the newsletter article. If

approved, this would be a true victory for

unscrupulous hospitals bent on totally

monopolizing the home health care market in

their areas. To think that an elderly person,

so ill as to be hospitalized and then met all

the criteria for home health care upon

discharge, would be in any condition to be

put through this proposed maze without just

giving up and saying, ‘‘Oh, go ahead and do

what you want’’ to the discharge planner, is

totally naive. No patient would be aware that

they have to jump through all these hoops

and I doubt seriously that any discharge

planner would even bother. At best, it would

be the word of a sick, feeble, elderly person

against the word of the hospital’s paid

employees that the hospital had complied.

The only way to ensure fairness when a

patient does not have a preference would be

for the hospital to be required to rotate

referrals among area home health agencies. If

a patient wants to explore home health

options, then a representative from any of the

various area home health agencies should be

able to visit and talk to the patient just as the

hospital’s representative does.

Regardless of what policy is adopted, the

one proposed by Health Choice of Northwest

Missouri, Inc., is incredibly self-serving and

is surely the most unfair and unjust proposal

I have seen to date. I beg of you to reject this

proposal and take time to develop a plan that

would truly insure patient freedom of choice

and level the playing field for all providers

of home health services.

Thank you for taking time to consider my

concerns.

Sincerely,

Steve Bryant

CC: Senator Dale Bumpers,

Senator David Pryor,

Congresswoman Blanche Lambert Lincoln

Powers, Pyles, Sutter & Verville PC,

Attorneys at Law

December 4, 1995

Gail Kursh,

Chief, Professional and Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, N.W., Room 9300,

Washington, D.C. 20530

Re: Proposed Final Judgment: United States

v. Health Choice of Northwest Missouri,

Inc., et al. Civil No. 95–6171–CV–SJ–6

(W.D. Mo.)

Dear Ms. Kursh: The Home Health Services

and Staffing Association (‘‘HHSSA’’) hereby

files comments on the proposed Final

Judgment, Stipulation, and Competitive

Impact Statement in the above-captioned

case in response to the invitation for

comments published at 60 Fed. Reg. 51808

(October 3, 1995).

HHSSA represents more than 30 home care

and staffing companies which have nearly

1,600 offices in virtually every state and the

District of Columbia which employ more

than 300,000 people and provide health care

services to more than 750,000 people on any

given day.

We believe the proposed Final Judgment is

inadequate in that it incorporates a referral

policy which is inconsistent with its stated

objective of promoting ‘‘patient choice.’’ See

Referral Policy, I. and II., 60 Fed. Reg. at

51812/2–3. Further, we believe that the

policy is contrary to 15 U.S.C. §§ 1 and 2 and

the Medicare Act.

The portion of the policy that creates the

greatest concern is the provision which states

that a hospital may promote its own home

health agency or hospital-affiliated home

health agency without informing the patient

that he or she has a choice of other agencies

and without informing the patient of the

name and contact person for other agencies.

The policy thereby permits the hospital to

engage in ‘‘steering’’ patients to the hospital’s

affiliated home health agency regardless of

the price or quality of the service.

It is this practice of steering home health

patients that was condemned in a recent

treatise as inconsistent with the pubic policy

underlying the antitrust laws, as well as

managed care. See The Importance of

Maintaining Competition and Antitrust

Enforcement in Health Care Reform (October

26, 1993) (copy attached). This practice

results in the destruction of competition,

which results in higher prices, reduced

quality, and loss of innovation. Id. at 2.

As the treatise points out, ‘‘[s]teering can

take many forms, but usually is

accomplished by the hospitals not informing

the patients of competitive alternatives, by

not giving patients the opportunity to select

another agency, by refusing to distribute the

literature of other agencies, by subtly

inducing or coercing staff physicians to order

only from the hospital’s home care company,

[and] by falsely disparaging the quality or

services of other agencies * * *’’ Id. at 17.

This steering activity has already resulted in

substantial litigation under the antitrust laws.

Id. at 20.

As the American Bar Association has

stated, ‘‘[a]ntitrust enforcement, which

promotes consumer choices and welfare

while restricting anticompetitive conduct,

will be vital to the implementation of health

care reform.’’ Id. at 14. The proposed Final

Judgment simply does not promote consumer

choice while restricting anticompetitive

conduct.

Further, we believe that promotion of

consumer choice among providers was one of

the foundation principles of the Medicare

Act. See 42 U.S.C. § 1395a, which protects

the right of any beneficiary to ‘‘obtain health

services from any institution, agency or

person qualified to participate under this title

* * *’’ This principle has further been

incorporated into an amendment to the

Medicare antifraud and abuse laws at

§ 1128D(a)(2)(C) by § 8105 of the Medicare

Preservation Act of 1995, which was passed

by Congress on November 17, 1995. That

amendment will require the Secretary of

Health and Human Services, in establishing

safe harbors under the antifraud and abuse

laws, to consider the extent to which such

action will result in ‘‘an increase or decrease

in patient freedom of choice among health

care providers.’’

Accordingly, we urge that the Final

Judgment be revised to require a referral

policy which informs all patients of their

freedom of choice of providers and provides

patients with a list of providers which they

may use to exercise this choice.
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29835

1See Facey Medical Foundation, IRS Exemption

Ruling, (March 31, 1993) (Doc. 93–4212); Friendly

Hills Healthcare Network, IRS Exemption Ruling

(January 29, 1993) (Doc. 93–1926); ‘‘Health-Care

Firms Face Checkup for Merger Potential,’’ The

Wall Street Journal, C1 (Oct. 12, 1993).

2See. e.g., State of Florida Health Care Cost

Containment Board, Joint Ventures Among Health

Care Providers in Florida (1991).

Sincerely,

James C. Pyles

The Importance of Maintaining

Competition and Antitrust Enforcement

in Health Care Reform

A Joint Position Paper of the American

Federation of Home Health Agencies

and the Home Health Services and

Staffing Association

October 26, 1993.

I. Executive Summary

The Clinton Administration has

released its long awaited health care

reform legislative package. The

Administration’s plan relies upon the

concept of ‘‘managed competition.’’

States will establish health insurance

purchasing cooperatives, known as

‘‘regional alliances,’’ to purchase health

care goods and services from privately

operated networks of health providers

and insurers that join together to

provide goods and services as a group.

In anticipation of health care reform,

hospitals are consolidating and

diversifying as never before into larger

‘‘health care systems’’ that provide

products far beyond traditional

inpatient hospital services, including

post-discharge goods and services such

as home health and durable medical

equipment.1 In some circumstances,

particularly where the hospital controls

a significant percentage of referrals for

a particular service and channels or

‘‘steers’’ its patients needing that service

to its own provider, serious

anticompetitive effects result. Other

providers of the service are unable to

compete on the merits and thus

competition is decreased or destroyed.

Hospital steering of patients to their

own home care companies in this

situation can have profound

anticompetitive effects. It can force

other home care companies from the

market based not on their prices or

quality but rather on the hospital’s

market power over referrals. The

arrangement between the hospital and

its own home health agency is a

stringent entry barrier, preventing new

providers of the service from entering

the market. Ultimately, the hospital

provider is able to exercise substantial

market power without a concomitant

superiority in quality and consumers

suffer. Prices for home care services

increase, quality falls, patient choice is

narrowed if not eliminated, and

innovation is quashed. Indeed, freestanding providers of home health

services and durable medical equipment

have brought several antitrust

challenges to this precise situation, and

studies of physician self-referrals to

ventures they own confirm these likely

effects.2

Providers of health care services,

particularly hospitals, now argue that, to

make health reform meaningful, they

need an exemption, or at least ‘‘more

lenient treatment,’’ under the antitrust

laws. Several bills including an antitrust

exemption for hospitals have been

introduced in Congress, and the Clinton

health reform proposal suggests,

incorrectly, that some fine-tuning of the

antitrust laws might be appropriate. On

the other hand, most knowledgeable and

objective observers, including the

Section on Antitrust Law of the

American Bar Association, have

concluded that health care reform will

not require any type of antitrust

exemption or antitrust ‘‘relief’’ for

providers.

The recently issued Department of

Justice and Federal Trade Commission

Statements of Antitrust Enforcement

Policy in the Health Care Area suggest

the same. The Statements, while

providing clearer guidance to hospitals

and physicians about the analysis of

particular antitrust-sensitive activities,

do not relax the antitrust laws or

antitrust enforcement and do not appear

to support any type of relaxation. Some

may misperceive, however, the timing

of the Statements’ publication and their

focus on antitrust enforcement in health

care as a signal that health reform

legislation justifies some type of

antitrust relaxation.

The American Federation of Home

Health Agencies (‘‘AFHHA’’) and the

Home Health Services & Staffing

Association (‘‘HHSSA’’), two of the

leading national associations of home

health providers, believe that providing

an antitrust exemption or lenient

antitrust treatment for hospitals or

others under health reform would

adversely affect consumers. Especially

as hospitals increasingly diversify by

providing home health and other nonhospital services, it is important to

retain current antitrust constraints and

strong antitrust enforcement to help

ensure that markets for home health

services remain competitive. With an

antitrust exemption or ‘‘antitrust relief,’’

health care systems will squeeze freestanding home health agencies out of

those markets and exercise market

power to the detriment of consumers of

home health services.

Accordingly, we oppose antitrust

relief for health care providers in the

context of health care reform or

otherwise. We believe that federal

health reform legislation should include

affirmative provisions ensuring that

home care companies and other

providers of health care service are able

to compete to participate in health plans

providing goods and services to health

alliances. We believe that for ‘‘managed

competition’’ to exist there obviously

must be competition, which will require

a formal mechanism to prohibit some

providers from exercising market power

to prevent others from competing. This

position statement outlines our reasons,

and we welcome the opportunity to

explain our position in more detail.

II. The American Federation of Home

Health Agencies and the Home Health

Services & Staffing Association

The American Federation of Home

Health Agencies (AFHHA), formed in

1981, is a national association of

approximately 170 Medicare certified

home health agencies. It includes many

different types of home care providers,

such as free-standing agencies, visiting

nurse associations, hospital-based

agencies, chain agencies, and county

agencies. State home health

associations, vendors to home health

agencies, consultants, and individuals

also are members. AFHHA seeks to

influence public policy on behalf of

home health consumers and its

members, and provides its members

with technical advice on numerous

problems and issues affecting the home

health industry.

HHSSA is the only national

association representing the proprietary

home health and supplemental staffing

industry. Founded in 1978, HHSSA now

includes approximately 23 member

companies with over 1,600 offices and

more than 250,000 health care workers.

Its purposes include encouraging and

promoting greater quality, efficiency,

reliability, and safety in the delivery of

home health care, improving the

services of home health providers to the

general public and discouraging

enactment of restrictive legislation,

regulations, or policies that impede

competition or adversely affect the

public. In pursuing these objectives and

based on its in depth knowledge of the

industry, HHSSA frequently comments

on important governmental policy

issues affecting its members and

consumers of home care services.
29836 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

3United States v. Topco Associates, 405 U.S. 596,

610 (1972).

4Northern Pac. Ry. v. United States, 356 U.S. 1,

4 (1958).

5E.g., FTC v. Ticor Title Ins. Co., 112 S. Ct. 2169

(1992); see generally 1 John J. Miles, Health Care

& Antitrust Law § 7.01 at 7–2 (1992) (‘‘A cardinal

principle of antitrust analysis * * * is that

immunity from the antitrust laws is disfavored,

primarily because of this nation’s commitment to

competition as the method by which resources are

to be allocated.’’).

6See generally Dana Priest, Clinton Health Plan

Includes Broad ‘‘Standard’’ Benefits, The

Washington Post, Sept. 4, 1993, at A1, A16.

7See generally Rick Wartzman & Hilary Stout,

Clinton Health Plan: Push Competition, Be Ready

to Regulate, The Wall Street Journal, Sept. 13, 1993,

at A1.

III. AFHHA’s and HHSSA’s Concerns

A. Introduction

The concerns of AFHHA and HHSSA

stem from four interrelated factors: (1)

The increasing tendency of hospitals to

diversify into home care services using

anticompetitive practices, such as

‘‘steering,’’ that exclude other home care

providers based on the hospitals’ power

over referrals rather than quality of care

considerations, and the resulting

adverse effects on consumers; (2) the

increasing tendency of hospitals to

consolidate and thus increase both the

percentage of referrals they control and

their power over referrals; (3) the effect

that health care reform might have in

inducing providers to consolidate and

integrate further and to diversify into

new services using anticompetitive

means; and (4) the efforts of some

providers, particularly hospitals, to

obtain statutory exemptions from the

antitrust laws or more lenient

interpretation of the antitrust laws.

Succinctly stated, health care

providers need no antitrust relief or

exemption. For managed competition to

achieve its anticipated benefits of

lowering costs and prices, increasing

quality and services, and improving

access, and promoting innovation, there

must be competition. And for

competition to exist, logic, economics,

and history show that strong antitrust

laws and enforcement are crucial.

Accordingly, health care reform must

include safeguards, at both the federal

and state levels, to ensure that home

health agencies, as well as other

providers, retain the opportunity to

compete based on their prices, quality,

and patient satisfaction or choice.

B. The Importance of the Antitrust Laws

The purpose of the antitrust laws is to

protect and promote competition as the

method by which our economy allocates

resources. The Supreme Court has noted

that the antitrust laws ‘‘are as important

to the preservation of economic freedom

and our free enterprise system as the

Bill of Rights is to the protection of our

fundamental personal freedoms.’’ 3 The

Court long ago explained that the

antitrust laws

rest on the premise that the unrestrained

interaction of competitive forces will yield

the best allocation of our economic resources,

the lowest prices, the highest quality and the

greatest material progress, while at the same

time providing an environment conducive to

the preservation of our democratic

institutions.4

For these reasons, strong antitrust laws

and enforcement have enjoyed wide

bipartisan support throughout their

history.

Section 1 of the Sherman Antitrust

Act proscribes agreements that

unreasonably restrain competition.

Section 2 of that statute prohibits sellers

from monopolizing, attempting to

monopolize, or conspiring to

monopolize the provisions of goods and

services. And section 7 of the Clayton

Act prevents mergers and other types of

integration between sellers if the likely

effect will be to lessen competition

substantially.

The basic concern of the antitrust

laws is to prevent businesses from

obtaining substantial ‘‘market power’’

achieved by means other than

competition on the merits. Market

power—the ability of sellers to raise

prices and reduce quality—both

transfers income from consumers to

producers (a form of ‘‘economic theft’’)

and distorts efficient resource allocation

by decreasing the amount of goods and

services produced.

The antitrust laws condemn the

acquisition of market power when it

results from conduct that excludes

competitors from the market without

achieving the values that competition

promotes. Thus, for example, a firm

cannot use its power in one market to

decrease or destroy competition in

another market. Yet, that is exactly what

happens when hospitals providing

home care services use their power over

referrals to exclude competing home

care services from the market. The

consumer, of course, is the loser. He or

she may pay inflated prices, receive

substandard quality, or, in general, not

be able to exercise the choice that the

antitrust laws envision. Consumer

access to health care services is reduced,

and innovation may be stifled.

Because of the indispensable role of

the antitrust laws in promoting the

welfare of consumers, exemptions from

antitrust coverage have always been

strongly disfavored.5 Given the

importance of the antitrust laws to a

properly functioning economy, those

arguing for ‘‘special antitrust treatment’’

bear an especially heavy burden of

persuasion.

C. Managed Competition

Although the precise form that health

care reform ultimately will take remains

uncertain, some form of ‘‘managed

competition’’ seems likely. Under the

Administration’s managed competition

proposal, standard benefits would

include home care as an alternative to

inpatient care,6 and thus home care will

be an important part of health care

reform.

Under managed competition, states

will establish one or more ‘‘regional

alliances’’ that will purchase health care

goods and services on behalf of

individual businesses and consumers.7

The theory is that regional alliances will

be able to coordinate the purchase of

health care services efficiently and to

exert some degree of countervailing

market power over sellers, resulting in

lower prices than could be obtained

through purchases by individual

businesses. Regional alliances would

accept payment from businesses and

consumers and offer them an array of

health plans from which to choose.

Regional alliances would purchase

goods and services from ‘‘health plans.’’

These will be integrated delivery

systems of providers delivering services

and insurers financing these services.

All forms of health care goods and

services, including hospital care,

medical services, home health services,

durable medical equipment, and drugs

could be integrated into large networks

or plans. Ideally, each geographical area

would include two or more plans that

would compete against one another,

based on price, type of reimbursement

mechanism (e.g., capitation, fee for

service, and the like), quality, array of

services, and convenience. Many

geographical areas, however,

particularly those with relatively sparse

populations and perhaps inner-city

areas, may be unable to support more

than one plan.

Health plans could take several forms.

For example, the delivery and financing

functions could be completely

integrated into a single entity as in a

Kaiser-type system. Alternatively, the

health plan might finance and

coordinate the marketing and delivery

of health care services, but contract for

their provision with different types of

providers. Single health care systems

formed by hospitals probably will

attempt to become the sole provider of
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29837

8See, e.g., National Bancard Corp. v. VISA

U.S.A., Inc., 779 F.2d 210 (11th Cir.), cert. denied,

479 U.S. 923 (1986) (upholding procompetitive

joint venture among competitors).

9One commentator has accused the hospitals of

‘‘crying wolf’’ and talking out of both sides of their

mouths when complaining about antitrust

enforcement. David Burda, Mergers Thrive Despite

Wailing about Adversity, Mod. Healthcare, Oct. 12,

1992 at 26.

10Appalachian Coals, Inc. v. United States, 288

U.S. 344 (1933) (noting that antitrust laws have the

adaptability of constitutional provisions).

11Recent Federal Trade Commission figures

indicate, for example, that from 1981 through 1992,

the Commission received some 332 premerger

notifications of hospital mergers. Of these, it

investigated about 14 and challenged three. FTC

Watch, Sept. 6, 1993, at 3.

12E.g., United States v. Rockford Mem. Corp., 717

F. Supp. 1251, 1280 (N.D. Ill. 1989), (market share

of approximately 72%), aff’d, 898 F.2d 1278 (7th

Cir.), cert. denied, 111 S.Ct. 295 (1990)

13ABA Working Group on Health Care Reform,

Antitrust Implications of Health Care Reform (May

14, 1993) at 2.

14 Id. at 17.

15Attorney General of Massachusetts, Antitrust

Guidelines for Mergers and Similar Transactions

Among Hospitals (Aug. 19, 1993).

It is both interesting and telling that neither the

Department of Justice and Federal Trade

Commission Statements, nor the Attorney General

of Massachusetts Guidelines contain or propose any

type of relaxed antitrust rules for hospitals. Rather,

both merely provide readable and understandable

explanations of how those agencies analyze the

potential antitrust ramifications of particular types

of conduct.

16The recent rescission by the Antitrust Division

of the much maligned 1985 Vertical Restraints

Guidelines is but one example of this. Anne K.

Bingaman, Assistant Attorney General, Antitrust

Division, ‘‘Antitrust Enforcement: Some Initial

Thoughts and Actions’’ (Aug. 10, 1993).

many types of health care services by

diversifying into all areas of health care

goods and services and then preventing

other firms providing these goods and

services from competing on the merits.

Enacting an antitrust exemption or

relaxing antitrust enforcement would

help guarantee this result. Consumers

would be the losers.

D. Economic Integration and Managed

Competition

In forming health plans, providers,

particularly hospitals, will attempt to

band together to deal ‘‘more effectively’’

with regional alliances. Encouraging

this consolidation by relaxing the

antitrust laws seems especially ironic

since a primary purpose for creating

regional alliances is to increase the

power of buyers and one goal of

managed competition reform is to

increase competition among providers.

Permitting providers to aggregate their

market power through integration

would seem to defeat these goals by

reducing or eliminating competition

among providers and allowing provider

conglomerates to neutralize the

increased bargaining power of health

care purchasers.

Regardless of whether a health plan is

a fully integrated single entity or

contracts with others for goods, services,

or financing, health plan formation

might result in several types of

economic integration. Two are:

1. Horizontal integration among

hospitals, by merger or joint venture,

which might achieve efficiencies but

which also raises the specter of market

power—not only in markets for hospital

services but in other markets, including

home care, as well;

2. Non-horizontal integration

(sometimes called vertical integration or

diversification), by unilateral entry,

merger, joint venture, or contractual

arrangement, by which sellers of one

good or service diversify into providing

other goods or services.

Both forms of economic integration

can generate procompetitive effects

benefitting consumers. To that extent,

we applaud them, and so do the

antitrust laws. Under applicable rule-ofreason antitrust analysis, they are

lawful 8 and need no exemption or relief

from the antitrust laws. On the other

hand, unrestrained integration can have

significant anticompetitive effects, in

which case it is and should be

condemned by the antitrust laws—

whether it occurs in the context of

health reform or otherwise.

The arguments of some provider

groups, namely that the antitrust laws

and antitrust enforcement in general

should be relaxed to permit what they

perceive as beneficial ‘‘collaboration’’

and integration through mergers

between, and joint ventures among,

competing hospitals, are misdirected.

We and others see no need for antitrust

relief regardless of the form that health

care reform takes.9 Indeed, we believe

serious damage to the health care

system and consumers would result

from relaxation of the antitrust laws.

In general, current antitrust principles

and enforcement should permit

beneficial integration among health care

providers, while prohibiting that which

might result in the integrating parties

obtaining market power. This is

particularly true since almost all types

of integration will be tested under

antitrust’s ‘‘rule of reason,’’ which

requires a fact-specific analysis of the

particular circumstances in which the

integration occurs. The antitrust laws

are thus ‘‘self-adjusting’’ to particular

sets of facts and economic

circumstances and are sufficiently

flexible to accommodate any special

characteristics or concerns that health

care industries or health reform raise.10

The enforcement agencies have

challenged few hospital mergers,11 and

those they did challenge resulted in

hospitals with unusually high postmerger market shares, usually over

50%.12 The agencies have challenged no

hospital joint ventures.

Both the Federal Trade Commission

and Antitrust Division have emphasized

the importance of strong antitrust

enforcement if health reform is to

succeed. We agree. It seems clear, for

example, that alternative delivery

systems, such as health maintenance

organizations, could not have developed

or generated the procompetitive effects

they have without antitrust enforcement

against organized resistance to them by

provider groups.

In addition, a working group of the

American Bar Association, which

approached the issue without bias,

recently concluded that ‘‘antitrust

enforcement should not be a barrier to

health care reform. Antitrust

enforcement, which promotes consumer

choice and welfare while restricting

anticompetitive conduct, will be vital to

the implementation of health care

reform.’’ 13 Thus, the group explained

that ‘‘[a] blanket exemption from the

antitrust laws is, therefore, neither

necessary or appropriate. The antitrust

laws are not a barrier to health care

reform but rather a means of promoting

and protecting the more innovative and

cost effective mechanisms contemplated

by health care reform.’’ 14 We agree with

this objective assessment.

The concern of some providers that

they lack antitrust guidance in planning

collaborative activities is more credible

but provides no basis for more lenient

antitrust treatment or an exemption

from antitrust coverage. Rather, the

solution to this problem is antitrust

guidance for the hospital industry. The

Federal Trade Commission and

Antitrust Division have done exactly

that by issuing their Statements of

Antitrust Enforcement Policy in the

Health Care Area on September 15. The

Statements explain in detail and in nonlegalese how the federal antitrust

enforcement agencies analyze

transactions such as hospital mergers

and hospital joint ventures which pose

a risk of violating the antitrust laws. In

addition, one state attorney general has

issued antitrust guidelines relating

specifically to hospital mergers.15

Early indications are that the Clinton

Antitrust Division will enforce the

antitrust laws more aggressively than

past administrations.16 We hope the

Clinton Administration has the courage

to adhere to the convictions it expressed
29838 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

17Some states—most without careful

examination—have enacted statutes intended to

permit hospitals to ‘‘collaborate’’ by merging or

entering into market allocation agreements if the

arrangement is approved by the state. Hospitals will

argue that these activities are protected from the

federal antitrust laws by the so called ‘‘state-action

exemption.’’ Whether the state statutes are

sufficient effectively to preempt the federal antitrust

laws is an unanswered question at present.

18The Federal Trade Commission is investigating

a similar factual pattern involving physicians.

Physicians who typically refer patients to another

facility for particular services related to their

practice (such as urologists referring to a lithotripsy

center) might establish a joint venture to render the

service and then refer all their patients needing the

service to their venture. If the joint venture includes

most physicians who refer patients for that

particular type of service, it will be difficult or

impossible for other facilities to compete or new

facilities to enter the market. See generally Kevin

J. Arquit, Director, Bureau of Competition, Federal

Trade Commission, ‘‘A New Concern in Health Care

Antitrust Enforcement: Acquisition and Exercise of

Market Power by Physician Ancillary Joint

Ventures’’ (Jan. 20, 1992).

19See eg., Atlantic Richfield Co. v. USA

Petroleum Co., 110 S.Ct. 1884 (1990).

20Eastman Kodak Co. v. Image Technical Servs.,

Inc., 112 S.Ct. 2072 (1992).

21Beacon Med Care, Inc. v. Sound Home Health

Servs., Inc., No. C84–478T (W.D. Wash. filed Aug.

9, 1984).

22 M&M Medical Supplies & Serv., Inc. v. Pleasant

Valley Hosp., 981 F.2d 160 (4th Cir. 1992) (en banc);

Advanced Health Care Servs. v. Radford

Community Hosp., 910 F.2d 139 (4th Cir. 1990); Key

Enters., Inc. v. Venice Hosp., Inc., 919 F.2d 1550

(11th Cir. 1990) (vacated and rehearing en banc

granted).

initially. It would be a shame for the

Administration to back away from its

commitment by establishing ‘‘special

leniency rules’’ for one segment of the

economy.17

E. Integration Affecting Home Health

Patients

The form of integration with the most

potential to affect adversely consumers

of home health services is that where

the hospital or health care system (or

several hospitals or health systems

together) diversifies into home care and

then, while hiding competitive options

from patients, ‘‘steers’’ those needing

home care to its own provider. This can

result in substantial anticompetitive

effects. The problem is occurring

already, and health reform likely will

exacerbate it, especially if Congress or

the antitrust enforcement agencies

embrace antitrust immunity or lenient

antitrust enforcement.

The competitive difficulty already

faced by many consumers of home

health services derives from a simple set

of facts. A hospital whose inpatients

constitute a significant percentage of

home health referrals in an area enters

the home health market, either

unilaterally, by acquiring an already

existing agency, forming a joint venture

with an agency, or through a contractual

relationship. The hospital then ‘‘steers’’

or ‘‘channels’’ its patients needing home

care at discharge to ‘‘its’’ company. It

might do this in part to escape the effect

of hospital rate regulation by federal or

state governments. For example, the

hospital may have substantial market

power in the market for hospital

services that it cannot exercise by

raising prices because of fixed DRG

payment amounts or state rate

regulation. Thus, to evade the effects of

rate regulations on its bottom line, it

diversifies into other markets with less

or no regulation. In these, if it can

obtain market power, it can exercise that

power by raising prices.

Steering can take many forms, but

usually is accomplished by the hospitals

not informing patients of competitive

alternatives, by not giving patients the

opportunity to select another agency, by

refusing to distribute the literature of

other agencies, by subtly inducing or

coercing staff physicians to order only

from the hospital’s home care company,

by falsely disparaging the quality or

services of other agencies, or by simply

disregarding or refusing to honor the

patient’s or patient’s physician’s choice

when he or she chooses a home care

company other than the hospital’s. One

requirement for competition to work is

that buyers and sellers be informed of

their options. In this scenario, however,

the hospital creates and exploits an

‘‘informational market imperfection.’’

Competitors of the hospital’s home

health service are ‘‘foreclosed’’ from

dealing with the hospital’s inpatients. If

this foreclosure is significant, which is

primarily a function of the hospital’s

importance as a referral source,

competing agencies will be unable to

obtain sufficient patients to remain in

business regardless of the cost or quality

of those services. Moreover, realizing

that a major source of referrals is ‘‘tied

up,’’ new agencies will not enter the

market; the hospital’s conduct raises an

entry barrier. Ultimately, as competing

agencies are forced from the market, the

hospital’s agency obtains substantial

market power, allowing it to raise prices

and lower quality to the detriment of

consumers. The freedom of patients to

choose is adversely affected, and

innovation is stifled. Costs also are

likely to increase because the hospital

home care company feels no pressure to

produce its services in the most efficient

manner. Depending on the

circumstances, the hospital’s actions

can violate sections 1 or 2 of the

Sherman Act or section 7 of the Clayton

Act.18

We recognize that the antitrust laws

are meant to protect competition, not

competitors.19 In other words, the

concern of the antitrust laws is not with

the survival of individual home health

agencies but with the effect of their

destruction on competition generally.

The antitrust laws assume that efficient

firms will force inefficient firms from

the market. Thus, home health agencies

offering high prices or inferior quality or

services should expect to fail—both now

and under health reform. Competition

on the merits weeds out some

competitors.

Our home health agencies welcome

competition on the merits, which the

antitrust laws promote. In the situation

presented above, however, there is no

competition on the merits and therein,

lies the problem. Competitors of the

hospital’s home care agency are not

forced from the market because of their

inferiority in relation to the hospital’s

agency, but rather because of the

hospital’s ability to control referrals and

exploit its patients’ lack of information

about competing agencies. If integrated

health care systems are allowed to gain

market power under the guise of a

‘‘health plan,’’ they will be able to

control patient choice even if the

patients are given information about the

plan’s services because the patients will

be ‘‘locked up’’ in that particular plan.

The Supreme Court, in a landmark

antitrust case last year, recognized that

lack of information by consumers could

result in a seller exercising market

power over them and that this lack of

information was an important

consideration in determining whether

an antitrust violation had occurred.20

Lack of information (or the cost of

obtaining information) reduces the

ability of consumers to switch to

potentially less costly and better

services and thus permits the seller to

charge higher prices or provide lower

quality than otherwise would be

possible. Indeed, the seller need not

even have a large market share for this

power to result as long as information

about competitors can be suppressed.

This scenario is more than idle

speculation. At least one antitrust case

has challenged a hospital’s steering

patients needing home health services

to its affiliated home health agency.21

Similarly, a number of antitrust suits

have challenged steering by hospitals to

their affiliated provider of patients

needing durable medical equipment,

resulting in three major decisions by

federal circuit courts of appeals, all in

favor of the plaintiff.22 Thus, even

absent reform, the problem is real, and

the loser is the consumer.

The adverse effects on competition in

home care markets can be magnified
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29839

23The concern over steering of patients by

physicians led Congress in the Omnibus

Reconciliation Act of 1993, § 13562, amending

section 1877 of the Social Security Act (42 U.S.C.

§ 1395nn), to prohibit physician ‘‘self-referrals’’ for

certain designated services, including home health

services.

24E.g., Alexandria Medical Artrs Pharmacy, Inc.

v. Alexandria Health Servs. Corp., No. 88–0110A

(E.D. Va. filed Feb. 3, 1988 (three hospital durable

medical equipment joint venture).

25See generally Sandy Lutz, Hospitals Continue

to Move Into Home Care, Mod. Healthcare, Jan. 25,

1993, at 28.

26See generally, Dynamic Diversification:

Hospitals Pursue Physician Alliances, ‘‘Seamless’’

Care, Hosps., Feb. 5, 1992, at 20; Urge to Merge

Strong in Health Care Field, Flint J., July 4, 1993.

when hospitals integrate horizontally.

Many home care patients are hospital

inpatients needing home care services at

discharge. When hospitals integrate, by

merging, for example, their power over

referrals for home health services

merges and increases as well. Typically,

if both hospitals have home care

companies, those companies also merge,

increasing their market power in the

market for home care services.

The same anticompetitive problem

can arise short of merger. For example,

competing hospitals might establish, as

many have done, a single home care

company by forming a home care joint

venture. The result may be

anticompetitive if, had they not formed

the joint venture, the hospitals would

have entered the home care market

independently or if the hospitals tacitly

or explicitly agree to refer their patients

needing home care to their joint

venture. That type of agreement is

analogous to physicians referring

patients to joint ventures in which they

have an economic interest, which

empirical studies have shown increase

both utilization and price.23 Hospital

joint ventures formed to provide durable

medical equipment have been subjected

to antitrust challenge.24

The integration that health reform

might generate if the antitrust laws are

relaxed will exacerbate the competitive

problems already experienced in home

care markets. The managed competition

model will induce hospitals to integrate

horizontally as they attempt to negate

the effects of health alliance purchasing

power. Managed competition also will

induce hospitals to diversify—integrate

non-horizontally—even further to

become the exclusive provider of both

hospital services and the full array of

health care services to AHPs, including

home care.25 Health care systems, for

example, are acquiring physician

practices to be able to offer medical

services in a package with hospital

services.26 They desire to offer a

‘‘seamless system’’ of health care in

which the system provides all needed

goods and services.

This presents no anticompetitive

problem if all providers remain able to

compete based on the merits of their

products and services, and purchasers

have access to the provider offering the

lowest quality-adjusted price. Seamless

systems, in fact, do have the potential to

produce significant efficiencies,

particularly by reducing the health

plan’s transactions costs in contracting

with providers. Seamless systems,

however, will not result in lower costs or

higher quality if they obtain market

power, and thus vigorous antitrust

enforcement in the world of managed

care will be crucial. Consumer welfare

will depend on the ability of integrated

and non-integrated providers to

compete against one another.

Hospitals are likely to use the

managed competition environment

affirmatively to squeeze other home

health competitors out of the market, by,

for example, ‘‘bundling’’ their package

of services (which includes home care)

such that the price for each service is

not discernible and thus comparable.

The transaction may resemble or

constitute a tying or ‘‘leveraging’’

arrangement whereby the health system

refuses to sell some services unless the

purchaser buys all. Or, if the health

system does offer the services

separately, it may price its home care at

below cost and then cross-subsidize

these losses temporarily with profits

from other services. It then easily might

be able to recoup its losses after

competing home health agencies are

forced from the market. The result will

be higher prices to consumers, lower

quality, and little, if any, freedom or

choice.

IV. What’s the Answer?

The answer to this potential

conundrum is both simple and clear: It

is imperative both that Congress not

loosen the antitrust constraints on

activities such as these and that health

care reform include provisions designed

to ensure that services, such as home

care, are selected on a competitive basis.

The proponents of antitrust relief have

failed to make their case, and the

dangers from granting relief are

manifest.

We will be able to suggest specific

strategies to ensure competition after we

have seen and analyzed the specifics of

the Clinton proposal. We believe,

however, that any reform legislation

should require that all providers be

permitted to compete to offer their

various services. Statutes or regulations

should require, for example, that health

plans select providers based on

competitive bids or a similar type of

competitive process. Regulations could

delineate objective criteria for selection

based on price, quality, services, and

cost effectiveness, perhaps with

provisions for appeal when health plans

fail to follow competitive procedures.

V. Conclusion

Home health services are a key part of

the health care matrix. The industry’s

importance is growing rapidly as the

country seeks better access to less

expensive forms of patient care and

more types of services can be provided

safely in the home. Accordingly, it is

important that markets for home health

services remain open and competitive,

offering patients cost effective, high

quality services and continuing

innovation. Providing hospitals (or any

providers) with an antitrust exemption

will inevitably lead to a loss of patient

choice, quality care, innovation and

effective cost control.

Thus, competition in home care

markets is critically important to

consumers, providers, and the

government alike. That competition

should not be needlessly eroded by

unwarranted special interest exemption

legislation or lenient antitrust

enforcement rules that may benefit

particular providers but will irreparably

damage the health care delivery system

and those it serves.

American Federation of Home Health

Agencies, 1320 Fenwick Lane, Silver

Spring, Maryland 20910, (301) 588–

1454.

Home Health Services and Staffing

Association, 119 S. Saint Asaph St.,

#115D, Alexandria, Virginia 22314,

(703) 836–9863.

Patient First

Home Health Nursing Services, Inc., 811

West Avenue, P.O. Box 1026, Wellington,

Texas 79095–1026

To: Gail Kursh,

From: Monni J. Reed, R.N., D.O.N., Patient

First Home Health, Wellington, Texas

Re: Proposed final judgment for United States

v. Health Choice of Northwest Missouri,

Inc.

As a practicing nurse for the last seventeen

years I have observed the emergence of home

health from the hospital, Dr’s office, and

now, home health office point of view.

While working in the Doctors office I saw

home health nurses come in with problems,

concern and suggestions for their patients

care. At that time the local hospital had no

home health so the Dr. felt free to admit to

an Agency without concern about hospital

conflict. I had left the Doctors office and was

working in the hospital when it opened it’s

own home health agency to try to increase

revenue to keep its doors open. (This hospital

has approx. 30 beds). Every Doctor on staff
29840 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

was expected to refer to the hospital home

health. Families and patients were

bombarded with literatures stressing the need

to use the hospital home health if they

supported the ‘‘local community’’ and want

to help keep the hospital in existence. I

witnessed a staff R.N. be terminated because

she worked for another home health on her

days off. (She’d been with that hospital for

6 to 10 years). After I had left that small town

hospital and started working for a home

health agency in another small town, I

frequently carried lab specimens and Doctor

orders to the small hospital in the town I now

work. I was very comfortable going into the

hospital to visit patients who were already on

our home health services. That halted

abruptly when this hospital opened their

own home health agency. Now, my patients

and their families report that while

hospitalized, the hospital home health

director tries (and sometimes does) to get

them to switch to the hospital home health

to support the community and keep the

hospital open.

This is directly against guidelines but

happens every day. Hospital administrators

feel they are above the rules and regulations

that the rest of us must live by. By passing

this bill as it stands we will only be giving

them the final go ahead.

Monni J. Reed

Kevin Miller, RRT, RCP

306 Live Oak St., College Station, Texas

77840, Home 409–693–6419, Office 409–

774–1198

November 29, 1995.

To: Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St.,

N.W., Room 9300, Washington, D.C.

20530

IE; Final Judgment for United States v. Health

Choice of Northwest Missouri, Inc., et

al., Case #95–6171–CV–SJ–6

Dear Ms. Kursh: I have been a health care

professional for many years with most of my

employment within hospitals as management

or in supervisory positions. This has given

me great knowledge of billing practices,

accreditation surveys as well as expansion of

service projects that include home health and

home medical equipment ventures.

The majority of hospitals in the United

States commonly overcharge, over utilize

service and often provide poor quality of

care. The poor quality of care and

malpractice are seldom noticed by JCAHO or

the general public as these problems are most

often covered up or altered to appear to be

appropriate care. Most surveys are

announced and scheduled. This allows

hospitals time to alter paper work and

generate reports that indicate they are

performing well in the patients best interest.

Further most hospital bills are not closely

scrutinized and contain a tremendous

amount of over billing and or charges for

unnecessary procedures and supplies. I am

confident that 80–90% of all patient bills are

in some way inflated. When over billing is

discovered most hospitals simply correct the

bill and indicate that there was a billing

error. I have noted many of these practices

at virtually every hospital I have worked with

and is common knowledge among many

health care professionals.

In the last few years there have been more

and more hospitals ever expanding into

home health, home medical equipment,

extended care facilities and other areas they

feel would profit them. Their position allows

them total access to these patients and the

ability to self refer them to their affiliates.

The patient loses their freedom of choice for

health care. Home care services have been

available for many years provided by

established free standing home health

agencies throughout America. These agencies

are experts with many years of experience

providing home care. They possess great

knowledge of the home care field and employ

a variety of medical professionals. These free

standing agencies for the most part provide

good care and have saved tax payers money.

It is well understood that home care is by far,

less expensive than hospitalization. This cost

savings have helped the home care market to

grow and have decreased the patients average

stay in the hospital. There is currently a large

network of free standing home care providers

within most areas of our country and there

is not a need for hospitals to extend their care

in these areas. This would only drive free

standing providers out of business and allow

hospitals the opportunity to monopolize on

every aspect of health care. This move would

further burden our entire American health

care system and add to the current health

care crisis.

There is always a conflict of interest

whenever a hospital based provider of home

health care is allowed to control all referrals.

If the DOJ allows this to happen, they are not

protecting the taxpayers interests. It would

only benefit hospitals. The ever increasing

cost of health care can be attributed to

hospitals that exploit their positions and

have caused health care spending to increase

unchecked. It alarms me to think of the

consequences this action would cause and its

impact on all Americans. A standard referral

procedure should be developed by the DOJ,

not Heartland as this will only result in

exploitation of patient referrals. I have

enclosed information on a recent ruling that

should provide guidance for the DOJ. Further

hospitals should be limited to prevent

monopolistic practices. There is little risk of

liability to hospitals if they inform the

patient that they are not responsible for non

affiliates upon referral.

The final judgement in this case may be

viewed as a precedence in future cases that

are similar. For this reason great care should

be taken to insure that stringent guidelines

are in place that govern hospitals referral

policies. Further restrictions are needed to

prevent hospitals from pursuing ventures

that are not in the best interest of the public.

It should be clear that hospitals and large

health care systems are in a prime position

to commit Medicare fraud and abuse. The

hospitals that are venturing into home care

should be suspect and closely scrutinized to

help discourage this abuse.

In closing I would like to thank the DOJ for

allowing comments on this case prior to the

final judgment. I hope that these comments

are helpful in determining this case.

Best Regards,

Kevin E. Miller

American Federation of Home Health

Agencies, Inc.

1320 Fenwick Lane, Suite 100, Silver Spring,

MD 20910, Phone (301) 588–1454, Fax (301)

588–4732

December 4, 1995.

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Antitrust Division, Department of Justice,

Room 9300—600 E Street, N.W.,

Washington, D.C. 20530.

Dear Ms. Kursh: The American Federation

of Home Health Agencies (AFHHA) wishes to

comment on the Department of Justice’s

proposed final judgment in the United States

v. Health Choice of Northwest Missouri, Inc.,

et al., Case No. 95–6171–CV–SJ–6, in the U.S.

District Court for the Western District of

Missouri. AFHHA is a national association

representing Medicare participating home

health agencies, the majority of which are

free-standing small business providers.

AFHHA contends that the proposed

judgement, if finalized, will convey to

hospital based entities a strong competitive

advantage, blessed by the Department of

Justice, which is not equitable to patients,

other providers, or the Medicare program. We

are pleased that the proposed judgement

constitutes an acknowledgement that the

patient has the right to receive home health

and other services from a provider of his or

her choice. Unfortunately, the Department of

Justice would allow this right to be easily

circumvented by the discharging entity.

The proposed judgement does little to

address current monopolistic practices of

some hospital networks. Home health

providers are experiencing ongoing problems

with the refusal of hospitals to refer patients

to home care agencies other than their own.

This extends to the point of refusing to honor

the patient’s or family’s specific choice of

provider and even though the non-affiliated

agency may offer a broader range of service

and greater access to care, including

emergency services.

Our members are Medicare participating,

which means that they meet very strict

Federal conditions of participation, and are

certified as meeting such standards by state

surveyors and/or by an accrediting body, i.e.,

the Joint Commission for the Accreditation of

Healthcare Organizations or the National

League for Nursing.

The procedures which you outline enable

a hospital to cast doubt on the reputation of

all non-affiliated home health agencies and

ensure that hospital based home care

providers will receive virtually all referrals.

Giving the hospital the right to hype or puff

their ‘‘excellent’’ services while disparaging

other providers with comments such as ‘‘we

cannot make a recommendation,’’ ‘‘have

done no evaluation,’’ and ‘‘cannot speak to

the quality of care’’ they provide stacks the

deck in favor of the hospital and against

competing providers.

The judgment also grants an unfair

advantage to the hospital’s ancillary services

by providing that the only source of
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29841

information that must be mentioned

regarding services offered by independent

providers is the Yellow Pages. Referring

patients to the Yellow Pages leaves them to

perform the legwork to identify other

qualified providers. Placed in this position,

most patients will simply agree to accept the

hospital’s ancillary service. Confused, sick,

frail elderly patients cannot ‘‘look it up’’ in

the phone book, even if able to read the print.

Nor do families ordinarily have the energy,

time, knowledge, or resources to fight for

their right to choose a provider at a time

when they are tending to a hospitalized

family member.

The Department of Justice may in fact end

up exacerbating the problem of captive

referrals. Hospitals are purchasing physician

practices and providers of ancillary services,

thereby guaranteeing a steady stream of

referrals. We have received many reports that

physicians have refused to sign home care

orders unless the patient agrees to use the

hospital based home health agency and that

physicians have told patients to find new

doctors if they wish to receive services from

non-affiliated providers. For their part,

physicians with privileges at, or on staff of,

hospitals are often subjected to enormous

pressure to channel all referrals to hospital

based entities. The Heartland solution does

not address such abuses.

AFHHA urges that the judgment be revised

as follows, in the interest of curbing

monopolistic practices, promoting

competition, and preserving the small

business infrastructure:

1. Hospital discharge planners must

demonstrate knowledge of available

resources and providers in the community,

and assist the patient in making contact, if

requested.

2. Patients requiring post hospital home

health services must be provided with a

written alphabetical list of all duly certified

providers in the area, along with phone

numbers.

3. Along with the written list of providers,

the hospital must distribute brochures

supplied by home health agencies in the area.

4. The hospital must indicate the types of

services offered by each listed agency, what

hours services are available, and whether the

home care provider is certified to participate

in the Medicare program by the state or by

an accrediting body. (Brochures supplied by

providers could also serve this purpose.)

5. Hospitals may not arbitrarily omit

providers from the list.

6. The patient’s choice of provider must be

honored. Referrals of patients who indicate

no preference must be made on a rotating

basis to those home health agencies which

offer the range of services ordered by the

physician.

7. The referring hospital must disclose any

financial relationship with providers on the

list supplied to patients.

8. The discharging hospital must obtain

written acknowledgement from patients and/

or family members that they have received

the required information.

9. Referring hospitals must establish a

grievance procedure for use by any patient or

provider who believes that their rights under

this judgment or under Medicare law have

been violated. Any such grievance must be

heard by a neutral mediator within five

business days of the alleged violation.

These changes we recommend will help

preserve competition. It was robust

competition that enabled the home health

infrastructure to respond to the challenge of

the 1982 implementation of the Medicare

Diagnostic Related Group reimbursement

system for hospitals. This reimbursement

change led to the earlier discharge of patients

from hospitals. Home health agencies have

implemented continuous quality

improvement programs, developed

technological and service innovations, and

bent over backwards to satisfy the consumer

of home care services. Where home health

providers are guaranteed a steady stream of

referrals by virtue of steering of patients by

a parent hospital, the quality, innovation,

and consumer satisfaction associated with a

competitive system will be greatly

compromised.

With Congress looking at competitive

markets as a big part of the solution to what

ails publicly funded health care programs,

this is not the time for the Antitrust Division

to enfranchise one model—the hospital based

model—as the prime deliverer of home care

in communities across the nation.

Sincerely yours,

Ann B. Howard,

Executive Director.

NAMES

National Association for Medical Equipment

Services

December 4, 1995.

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, NW, Room 9300,

Washington, DC 20530.

Dear Ms. Kursh: The National Association

for Medical Equipment Service (NAMES)

hereby submits comments on the proposed

consent order in United States v. Health

Choice of Northwest Missouri, Inc., et al.,

Case No 95–6171–CV–S1–6 (W.D. Mo.).

NAMES is a nonprofit association of over

1800 suppliers of home medical equipment

(HME) and services, in approximately 4000

sites across the country. Based upon

individual patient needs and according to

physicians’ prescriptions, NAMES members

furnish a wide variety of equipment,

supplies, and services for home use, from

traditional medical equipment such as

oxygen and hospital beds, highly

sophisticated items and services such as

parenteral and enteral nutrition and supplies

and specialized wheelchairs. NAMES

member companies include both

‘‘freestanding’’ independent HME entities

and those with hospital affiliations, either

through ownership or contractual

arrangements.

NAMES is concerned with those

provisions of the proposed settlement

involving Heartland Health Systems Inc.,

which set forth the hospital’s obligations

when referring patients to hospital-affiliated

ancillary service providers, including its

HME supplier. DOJ’s focus in the case was

on a separate issue—collusion with

physicians—and the ‘‘patient referral to

affiliated companies’’ aspect of the hospital

operation necessarily constituted a smaller

part of the agency’s scrutiny. NAMES is

concerned, however, that these provisions of

the final agreement (Section II, entitled

‘‘Ancillary Service Referrals’’) may be viewed

as setting a standard for the industry for

hospital-owned or affiliated HME providers.

Referrals by a hospital to an affiliated

ancillary service provider give rise to

numerous regulatory issues relating to

patient freedom of choice, including whether

full disclosure of the affiliation has been

made to patients and whether the patients, in

turn, have provided informed consent to

receive services from the affiliated provider.

NAMES’ Code of Ethics addresses this issue

specifically, providing at paragraph 9 that

HME suppliers must:

avoid participating, directly or indirectly,

with a source of patient referrals in a

‘‘captive referral arrangement’’ whereby

patients are directed to utilize a supplier

of home medical equipment in derogation

of the patients’ rights to select the supplier

of their choice.

Some NAMES members have expressed the

view that the proposed policy—which does

not require the hospital having an affiliated

ancillary service provider to inform the

patient of other area suppliers—does not

ensure informed patient consent and freedom

of choice.

Given the complexity of the issues

involved, and the fact that this aspect of the

settlement did not constitute DOJ’s primary

focus in this case, NAMES recommends that

the DOJ clarify the proposed order to make

clear that if it is not intended to establish an

industry standard. Alternatively, DOJ should

furnish a more detailed explanation of the

competitive factors which it considered in

accepting the hospital’s proposal in this case.

Overall, NAMES believes that an effort to

articulate standards for hospital referrals to

affiliated HME suppliers would be beneficial.

The adoption of clear, objective standards

would do much to reduce or eliminate the

multiple disputes which have arisen in this

area.

Please do not hesitate to contact us with

any questions.

Sincerely,

William D. Coughlan,

President and CEO.

NAMES

National Association of Medical Equipment

Suppliers

CODE OF ETHICS

Having been accepted into membership in

the National Association of Medical

Equipment Suppliers, we do hereby

subscribe without reservation to the

Association’s Code of Ethics.

The purpose of the Code of Ethics shall be

to set and improve standards within the

practice of providing home medical

equipment and services. To maintain the

ethical conduct and integrity of this

Association, a member pledges to abide by

the following:
29842 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

1. To render the highest level of care

promptly and competently taking into

account the health and safety of the patient.

2. To serve all patients regardless of race,

creed, national origin or reason of illness.

3. To provide quality home medical

equipment and services which are

appropriate for the patients’ needs.

4. To instruct the patients and/or

caregivers in the proper use of the

equipment.

5. To explain fully and accurately to

patients and/or caregivers patients’ rights and

obligations regarding the rental, sale and

service of home medical equipment.

6. To respect the confidential nature of the

patients’ records and not to disclose such

information without proper authorization,

except as required by law.

7. To continue to expand and improve

professional knowledge and skills so as to

provide patients with equipment and

services which are continually updated.

8. To abide by both Federal and local laws

and regulations which govern the home

medical equipment industry.

9. To avoid participating, directly or

indirectly, with a source of patient referrals

in a ‘‘captive referral arrangement’’; whereby

patients are directed to utilize a supplier of

home medical equipment in derogation of the

patients’ rights to select the suppliers of their

choice.

10. To act in good faith; to be honest,

truthful and fair to all concerned.

Gibson Health Services

1468 State Street, P.O. Box 368, East St.

Louis, IL 62202, (618) 274–6026

December 4, 1995.

Ms. Gail Kursch,

Chief Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Anti-trust

Division, 600 E. Street, N.W., Room 9300,

Washington, DC 20530.

Re: United States v. Health Choice of

Northwest Missouri, et al, Case No. 95–

6171–CV–SJ–6, United States District

Court for the Western District of

Missouri.

Dear Ms. Kursch: I understand that you are

accepting comments on the proposed

settlement for the above referenced case.

I feel that it is not only unjust but also

inhumane to condone, endorse or approve a

policy or settlement that allows a discharge

planner to give a patient a telephone book

unless the patient asks a second time instead

of a list of area Home Health Agencies.

My staff and I would like for you to

consider the following regarding the

Department of Justice’s recommended Home

Health Referral Policy:

1. It represents a discriminatory act against

a person who is illiterate or who has a

limited reading and/or mental capacity.

2. If the patient cannot read or has a

limited mental capacity, this denies the

patient their right to make an informed

decision.

3. Depending upon the community the

hospital is located, the phone book may not

list all of the agencies that provide services

where the patient lives. For example, if this

patient lives in East St. Louis, Illinois and

was in a St. Louis, Missouri hospital (which

is common) and is given a St. Louis, Missouri

phone book, my agency in East St. Louis

would never be recognized.

4. It reflects a blatant kickback violation

because the ‘‘intent’’ is merely to increase the

hospital’s revenues. Does the hospital have

its own ambulance service? transportation

service? private duty service? home oxygen

service? etc.? If not, how is the patient made

aware of their option for these services? If

options are offered for services that they do

not provide, sounds like something is really

wrong not to do the same for services they

do provide.

5. While we can clearly understand that a

hospital may not want to ‘‘endorse’’ other

Home Health Agencies, providing a list of

available agencies could be beneficial to

everyone. The patient is conveniently given

information for decision making, the free

standing Home Health Agency is fairly

recognized and the hospital has a better

working relationship with the Home Health

Agency which helps everyone.

6. The hospitals could simply provide a list

of agencies by name, address, phone and area

served. It would be ideal to also include the

disciplines and specialties offered by the

agency. The hospital Discharge Planner could

then read off the list of agencies serving the

patient’s community. A senior citizen or

person with limited reading ability might

recognize the name of an agency he or she

is familiar with. In addition, many persons

prefer to support agencies within their

community. This is particularly important in

minority communities where there may be a

strong ethnic consciousness to support their

own minority businesses to help with jobs,

taxes, etc.

7. It’s simply more convenient for the

patient. Patients are now leaving the hospital

in more acute states. If you were sick, would

you want to try to find something in the

Yellow Pages that you knew nothing about?

8. If this hospital is only going to give the

patients a phone book and the sick person

says ‘‘That’s OK, I don’t feel like looking

through a phone book,’’ will the hospital’s

Home Health Agency follow all patients that

are discharged from the hospital?

• The patient with no coverage?

• The patient that lives in the high crime

areas?

• The patient that travelled a long distance

to this hospital who lives perhaps 50 miles

or more away??

• The patient on Medicaid (The

significance of this will vary from state to

state. Some states reimburse cost while other

states reimburse well below cost. For

example, in Illinois, Medicaid only pays

$41.55 per visit without consideration that

the cost is $55 to $75 per visit.)

In summary, we would recommend that

Sections II.B.2 and II.B.3 of the attached

recommended policy be removed to reflect

that a list of area Home Health Agencies are

read and given to the patient which includes

the hospital’s home health agency. The

hospital could note that they are not

endorsing the other agencies, but stress that

the information is given for them to make the

choice. The patient/family should be offered

the time, if desired, to call some of the

agencies if they want more information.

If I can be of further assistance in this

matter, do not hesitate to call. Thank you for

your attention.

Sincerely,

Patricia A. Gibson,

Chief Executive Officer.

C: National Association of Home Care,

Illinois Home Care, Council

Law Offices, Small, Craig & Werkenthin, A

Professional Corporation

Suite 1100, 100 Congress Avenue, Austin,

Texas 78701–4099, (512) 472–8355, San

Antonio Office, 300 Convent Street, Suite

1950, San Antonio, Texas 78205–3738, (210)

226–2080, Facsimiles, Austin: (512) 320–

9734, San Antonio: (210) 226–2646.

December 1, 1995.

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St. N.W., Room 9300, Washington,

DC 20530, VIA FAX NO. (202) 514 9978.

Re: Comments on Proposed Final Judgment;

United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6; In the U.S. District

Court for the Western District of

Missouri.

Dear Ms. Kursh: This law firm represents

Texas Home Health, Inc. which is a home

health care provider in Texas. With respect

to the Proposed Final Judgment in the above

matter, Texas Home Health submits the

following comments.

The referral procedure developed by

Heartland Health System would allow

Heartland to maintain a competitive

advantage over other providers in the

situations in which the patient does not have

a provider preference. Under Heartland’s

proposal, if the patient does not have a

preference, the discharge planner is allowed

to inform the patient that Heartland has the

capability to provide the services and

apparently would be allowed to make

representations as to the quality of service to

be provided. If the patient does not accept

Heartland’s services, it appears that the

patient would be given a telephone book and

informed that there are other providers for

which quality representations cannot be

made.

If this procedure is followed, it is unlikely

that any provider other than Heartland would

receive referrals. Apart from the fact that

Heartland would be in a position to

embellish quality and provide tacit

indications that it is preferable to other

providers, if a patient has no preference as

to providers, the patient will more likely than

not choose Heartland because it has no other

information about the other providers. The

patient would be forced to locate other

providers in a telephone book and make its

own investigation. It is unlikely patients will

expend this effort. Additionally there may be

a perception that the other providers do not

provide services having the same degree of

quality as Heartland.

To correct these deficiencies in the

proposal, the discharge planner should
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29843

provide the patient with the names of every

provider that has requested to be included on

the information listing. No preference should

be given to Heartland, and the same type of

information should be given for each

provider. Heartland should be precluded

from making oral representations about its

services or implying that its services are

superior to those of other providers unless

other providers are given the opportunity to

make similar presentations.

Other providers should be given the

opportunity to have brochures distributed to

the patients. The essence of the procedure

should be to ensure that the patient has

freedom of choice and that Heartland cannot

exploit its position to give it a competitive

advantage. Heartland’s proposal will not

accomplish this.

Only if all providers participate on a level

playing field can freedom of choice truly

occur. All providers should be given the

opportunity to be included on a listing of

eligible providers and to provide information

that can be evaluated by the patient without

influence from the discharge planner.

Otherwise, the discharge planner could

effectively control the patient’s decision or

provide information in a favorable light to

Heartland. The effect of this is that other

providers are precluded from having the

opportunity to market their services to

potential consumers.

Texas Home Health respectfully requests

that you consider the potential abuse with

the proposed referral procedure.

Very truly yours,

William R. McIlhany

Central Home Health Care

Decatur Office, 495 Winn Way Suite 100,

Decatur, Georgia 30030, 404/296–0805.

November 29, 1995.

Gail Kursh,

Chief, Professional & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. Street, N.W., Room 9300,

Washington, D.C. 20530.

Re: Comments on Proposed Final Judgement:

United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6 in the U.S. District

Court for the Western District of

Missouri.

Dear Ms. Kursh: As a home health care

provider I have first-hand knowledge of the

subject matter the Department of Justice is

dealing with in the above referenced matter.

I also understand the influence a hospital can

exert in a patient’s selection of post-hospital

ancillary services, including the selection of

a home health care provider. For these

reasons I have reviewed and studied the

DOJ’s recommended home health, DME and

hospice referral policy for Heartland

Hospital.

In the interest of protecting patient choice

(which is guaranteed by both Federal and

State laws) as well as maintaining fair

competition consistent with the antitrust

laws and FTC regulations, I respectfully

submit that the final proposed judgement

(recommended policy) be modified as such:

• strengthen limitations on the hospital’s

ability to refer its patients to its own hospitalbased components;

• require the hospital to provide patients

with an updated list of Medicare/Medicaid

providers in the community;

• require the hospital to use a rotation

system, which assures equitable referrals to

all providers in the area;

• require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and to

expose the patient population to the

availability of outside services as well;

• make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

On behalf of our home health agency and

the patients we serve, we respectfully ask

that you give these comments due

consideration. These issues are of even more

concern in today’s era of health care and

provider consolidation.

Sincerely,

Sandy Caroland,

Administrator.

Healthfield Services of Middle Georgia, Inc.

2490 Riverside Drive, Macon, Georgia 31204,

912/743–5769.

November 29, 1995

Gail Kursh,

Chief Professional & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. Street, N.W., Room 9300,

Washington, D.C. 20530.

Re: Comments on Proposed Final Judgement:

United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6 in the U.S. District

Court for the Western District of

Missouri.

Dear Ms. Kursh: As a home health care

provider, I have first-hand knowledge of the

subject matter the Department of Justice is

dealing with in the above referenced matter.

I also understand the influence a hospital can

exert in a patient’s selection of post-hospital

ancillary services, including the selection of

a home health care provider. For these

reasons, I have reviewed and studied the

DOJ’s recommended home health, DME and

hospice referral policy for Heartland

Hospital.

In the interest of protecting patient choice

(which is guaranteed by both Federal and

State laws) as well as maintaining fair

competition consistent with the antitrust

laws and FTC regulations, I respectfully

submit that the final proposed judgement

(recommended policy) be modified as such:

• strengthen limitations on the hospitals

ability to refer its patients to its own hospitalbased components;

• require the hospital to provide patients

with an updated list of Medicare/Medicaid

providers in the community;

• require the hospital to use a rotation

system, which assures equitable referrals to

all providers in the area;

• require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and to

expose the patient population to the

availability of outside services as well;

• make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

On behalf of our home health agency and

the patients we serve, we respectfully ask

that you give these comments due

consideration. These issues are of even more

concern in today’s era of health care and

provider consolidation.

Sincerely,

William H. Hursey,

Administrator.

Date: November 29, 1995

To: Gail Kursh, Department of Justice,

Washington, D.C.

Re: The final judgement for United States v.

Health Choice of Northwest Missouri,

Inc. Case #95–6171.

I support the referral procedure Heartland

Health System developed for home health,

DME and hospice services.

If a physician specifies the provider to be

used, ancillary services continue to be

medically directed. This prevents the

physician or facility from incurring any

liability by selecting providers through

rotation or otherwise without credentialling

or quality assurance procedures. The patient

should be asked if this is acceptable, and if

so, referred to that provider.

The patient’s preference should always be

honored if the physician does not order a

specific provider.

Agencies should honestly and

conscientiously cooperate in providing

information to assure comprehensive services

to clients and their families.

It has been my experience, hospice services

are not as competitive as home health

because of the profits involved. The number

of home health agencies has escalated

dramatically this last year. I am saddened,

because I see home health becoming ‘‘big

business’’ and not a community service any

longer. Agencies within our service area have

always respected each other and provided

service for our individual communities.

Many of the newer for-profit agencies do not

follow the Medicare guidelines. Some

agencies tell their patients that they may

drive and never address safety or interim care

needs for fear of losing a patient.

Heartland Health Systems has developed a

referral system that keeps home health and

hospice medically directed and holistic in

nature, the way it was intended.
29844 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Sincerely,

Reneah Wilson,

Home Health/Hospice Director, Ochiltree

Hospital District, 2402 South Main, Perryton,

Texas 79070.

Shannon Medical Center

Home Health Services, 120 E. Harris, San

Angelo, Texas 76902, (915) 6533–6741

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. St., N.W., Room 9300,

Washington, D.C. 20530.

Dear Ms. Kursh: As a hospital-based

provider of home care services, I am in favor

of the proposed final judgment in the United

States vs. Health Choice of Northwest

Missouri, Inc. et al., Case No. 95–6171–CV–

SJ–6. I find the requirements set out for

referrals determination quite satisfactory in

assuring patient choice and maintaining

competition. Contrary to popular beliefs,

hospital-based home care agencies do not

have a monopoly on referrals and many of us

do our utmost to provide patient choice and

are very conscientious in maintaining the

Medicare Conditions of Participation. I

strongly encourage the judgment to stand and

for the Department of Justice to resist placing

any additional burdens on providers which

would be unnecessary.

Thank you for your consideration.

Yours truly,

Janis Fuchs,

Director, Shannon Home Health Services, 127

E. Beauregard, San Angelo, Texas 76903.

Keweenaw Home Nursing & Hospice

414 Hecla Street, Laurium, Michigan 49913,

Fax: (906) 337–9929, 1–800–594–7053, (906)

337–5700

December 1, 1995.

Gail Kursh,

Chief Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. St.,

NW, Room 9300, Washington, DC 20530.

Dear Ms. Kursh: As an owner of a small

rural free standing home health care agency,

I have real concern about the recent DOJ

ruling in the matter of U.S. v. Health Choice

of Northwest Missouri, Inc.

Our agency has an excellent reputation for

quality in our community. In over 6 years of

existence we have been Medicare certified

without a single deficiency. For nearly 3

years, we have maintained CHAP

accreditation through the community Health

Accreditation Program of the National League

for Nursing.

The two local hospitals have teamed

together and created their own home care

agency. To some degree these hospitals give

patients choice but certainly will not

continue to give choice under the DOJ ruling.

These hospitals are very aware of our quality

and reputation and certainly could ‘‘speak to

the quality’’ of our program.

Please reconsider the DOJ’s decision in the

case and protect the individuals freedom of

choice. The future of the free standing agency

depends on it.

Sincerely,

Diane Tiberg

Visiting Nurse Services of Southern

Michigan, Inc.

311 East Michigan Avenue, Suite 200, Battle

Creek, Michigan 49017–4939, Battle Creek

(616) 962–0303, Coldwater (517) 279–7550,

Albion (517) 629–8100, Toll-Free 1–800–

622–9822, FAX (616) 962–8810

November 28, 1995.

Gail Kursh,

Chief Professional and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Anti Trust

Division, 600 E. St. NW, Room 9300,

Washington, D.C. 20530.

Dear Mrs. Kursh: We are writing to give

input in the case, United States v. Health

Choice of Northwest Missouri, Inc, et al; case

number 95–6171 CV–SJ–6 in the U.S. District

Court for the Western District of Missouri.

We are a non-profit home care agency

serving Southwest Michigan. We wish to

urge that hospitals be required to continue to

offer patients choices for care so that the

value of the free market can continue to

influence quality. Patients need to be able to

judge and select based upon quality.

Monopoly influence often tends to rule out

this free choice.

We propose that the final judgment be

modified to:

• Strengthen limitations on the hospital’s

ability to refer it’s patients to it’s own

hospital-based components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers in the area;

• Require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and to

expose the patient population to the

availability of outside services as well; and,

• Make the hospitality publicly post it’s

daily referrals to both it’s hospital-based

entities and to other providers in the

community.

Please consider this as the final judgment

is made. Thank you.

Sincerely,

Judy Hoelscher,

Vice President of Clinical Services.

Visiting Nurse Association of Martin/St.

Lucie County, Inc.

2400 S.E. Monterey Road, Suite 100, Stuart,

Florida 34996, (407) 286–1844, All Areas

930–6877, Joint Commission on

Accreditation of Health Care Organizations

November 28, 1995.

Gail Kursh

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. St. N.W. Room 9300, Washington,

D.C. 20530.

Re: United States v. Health Choice of

Northwest Missouri, Inc., et. al. Case No.

95–0171–CV–SJ–6.

Dear Ms. Kursh: The proposed final

judgement for U.S. v. Health Choice is a step

back for quality care in the home health care

setting. Competition supports and promotes

a high quality of care, evidenced by clinical

outcomes, cost-effective clinical guidelines,

patient satisfaction and appropriate use of

community resources. Your proposed

judgement has the potential to create a

monopoly for hospital-based home health

care agencies and may end competition in

home health care.

Hospitals have a ‘‘captured audience’’ of

vulnerable patients who feel dependent upon

the hospital staff. Patients are not likely to go

against a discharge planner’s referral to the

hospital home health agency for fear that

their failure to ‘‘cooperate’’ may create an

environment where the patient’s continuing

needs (in-patient needs and paperwork for

reimbursement needs) may not be met or may

be delayed.

Additionally, hospitals exert their

influence over physicians (with hospital

privileges) to refer only to the hospital-based

agency in order to support the hospital. Some

hospitals have even moved their home health

agency from being a separate entity to a

hospital department, so that self-referrals are

not subject to GAO investigations instituted

by Rep. Pete Stark (D–Calif.). A second

reason is to shift administrative costs under

the present MEDICARE Cost Reimbursed

Home Health System.

Over the past two years hospitals

discontinued the referral rotation system;

discontinued hospital access to patients by

agencies who serve them, refer only to their

own agencies, called physicians to ask why

a hospital patient was referred to an outside

agency, etc. These actions clearly

demonstrate a move to a monopoly system.

Hospital arguments for promoting their

own agency at the exclusion of outside

agencies include continuum of care, referrals

to other agencies would require hospital

credentialing of outside agencies, and

hospitals always give the patient a choice. It

is easy to refute these claims.

The traditional continuum of care has

always been from organization to

organization, be it a hospital or other

community resource agency, with patient

information transferred between

professionals who are trained to focus on

continuity and coordination of care. Just

because a home health agency has the same

name or is affiliated with a hospital does not,

in itself, assure a continuum of quality care.

The responsibility of a discharge planner

includes knowledge and judgement regarding

all home health care community resources

that would benefit the patient. Discharge

planners know resources available and

receive feedback regarding the quality of care

from these resources. Many state home health

agency licensure laws establish standards

that agencies must meet, so hospitals know

that standards are met and don’t need to

‘‘credential’’ them. Additionally, many home

health agencies today are accredited

themselves through either the Joint

Commission on the Accreditation of Health
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29845

Care Organization (JCAHO), or the

Community Health Accreditation Program

(CHAP).

Finally, hospitals ALWAYS state they give

the patient a choice, yet many patients have

told outside agencies that during their

hospitalization, hospital representatives have

almost insisted they use a hospital-based

agency. Also, physicians who refer to outside

agencies tell outside agencies that as soon as

the patient is admitted, before the physician

even discusses discharge with the patient (to

advise them of options), the hospital-based

agency has already been in to talk with the

patient and already has them signed up as a

referral for their agency.

Thank you for the opportunity to send my

comments on your proposed final judgement

for the above mentioned case. Please don’t be

persuaded by big hospital corporations and

hospital lobbyists to pass a judgement that

quite probably abolishes competition in

home health care and effectively gives

patients no choice.

Sincerely,

Robert J. Quinn,

Director of Operations.

Cornerstone Home Health Care

6300 Samuell Blvd., Suite 120 B, Dallas,

Texas 75228–7100, Phone: (214) 681–1600,

Fax: (214) 381–2900

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St.,

NW., Room 9300, Washington, DC

20530.

To: Gail Kursh,

As an owner of an independent home

health agency, I recommend that the

Department of Justice should allow the

hospital discharge planner give a list of all

home health agencies serving the

neighborhood of the patients residence area.

I would also recommend that the patients be

given a brochure of the agencies requested by

the patient so they will be able to choose the

service of their choice. The hospital based

agencies should self refer no more than 50%

of the patients discharged from the hospital

to its own or related home health agency. The

discharge planner should give a list of all

agencies serving the area to the doctors at the

hospital for their information.

I hope my suggestions will help you and

the survival of all the independent home

health agencies.

Sincerely,

Tom Varughese,

Administrator.

National Home Infusion Association

205 Daingerfield Road, Alexandria, VA

22314, Phone 703–549–3740, Fax 703–683–

3619

December 4, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street NW., Room 9300,

Washington, DC 20530.

Dear Ms. Kursh: On behalf of the members

of the National Home Infusion Association, I

am writing to express our concerns regarding

the proposed final judgment for United

States v. Health Choice of Northwest

Missouri, Inc., et al., Case No. 95–6171–CV–

SJ–6 in U.S. District Court for the Western

District of Missouri.

Specifically, while we believe the

proposed final judgment in regard to the

referral policy is a well intended attempt to

address this issue, we are concerned that

instead it will further strengthen the growing

anticompetitive environment in which

institutions capture referrals for their own

outpatient service companies.

Nationwide, two out of every three

hospitals now offer some form of home care

services and the numbers are continuing to

grow at a rapid pace. That means that today,

institutional inpatients have a higher

potential to be captively referred to an

institution’s own outpatient service company

than ever before.

The department’s proposed guidelines

appear to base the balance to an institution’s

self-referral with a physician discharging a

patient, out of the same institution who

grants that physician privileges to work

within that institution, into the care of a

competitor of that institution and with the

hospital’s own filtration of information to the

patient as it concerns competitors to its

outpatient service company(ies).

Our organization routinely receives calls

from both outpatient providers and

physicians indicating that hospitals are

increasingly pressuring physicians and

patients, both directly and indirectly, to

utilize the hospital’s own outpatient services.

It is our belief that outpatient service

providers should be allowed unfiltered

access to potential referral patients, and that

restrictions should be placed on a hospital’s

ability to pressure physicians. We believe

this will create and foster a competitive

environment.

Therefore, NHIA urges you to support the

incorporation of the Coalition for Quality

Health Care’s recommendations into the final

judgment, namely:

• to strengthen limitations on the

hospital’s ability to refer its patients to its

own hospital-based components; to require

the hospital to use a rotation system which

assures equitable referrals to all providers in

the area; and

• to require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and

• to expose the patient population to the

availability of outside services as well; and

• to make the hospital publicly post its

daily referrals to both its hospital-based

entities and to other providers in the

community.

It is NHIA’s position that the proposed

final judgment needs to recognize that both

patients and physicians are in a vulnerable

position within an institution and that

measures such as those recommended by the

Coalition for Quality Health Care need to be

incorporated to foster and ensure a

competitive environment.

Sincerely,

Robin J. Richardson,

Executive Director.

Visiting Nurse Associations of America

3801 E. Florida Ave., Suite 900, Denver, CO

80210, (303) 753–0218, Fax 753–0258

December 4, 1995.

Ms. Gail Kursh,

Chief Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, NW., Room 9300,

Washington, DC 20530.

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6 in the U.S. District

Court for the Western District of

Missouri.

Dear Ms. Kursh: The Visiting Nurse

Associations of America (VNAA) presents the

following comments to urge the United States

Department of Justice (DOJ) to withdraw its

consent to the proposed final judgment

regarding United States v. Health Choice of

Northwest Missouri, Inc., et al. in order to

modify the judgment to better serve the

public interest.

VNAA is a national membership

organization, representing 210 Visiting Nurse

Associations (VNAs) throughout the United

States. VNAs are home- and communitybased, nonprofit, Medicare-certified home

health and hospice agencies. The VNA

mission is to provide the most compassionate

and cost-effective care possible to our

patients without regard to their ability to pay.

VNA’s services range from homemaker

services to skilled nursing care, including

high-tech services such as blood transfusions

and chemotherapy. HCFA’s 1993 data

demonstrate that 26% of all Medicare home

health admissions that year were to VNAs.

VNAs also carry the majority of Medicaid

home care and a significant volume of

privately-insured home care. Because VNAs

have provided care regardless of patients’

ability to pay for over 100 years, they have

been, and continue to be, the safety net for

uninsured and underinsured patients.

Charity support allows VNAs to be that safety

net, bridging the gap between cost of care and

reimbursement.

As the delivery of health care moves

increasingly away from the hospital to the

home, patients must be assured they have

access to a broad range of providers,

including free-standing agencies such as

VNAs. VNAs have both the historic mission

and the cutting edge clinical advances for

treating patients in the home. VNAA believes

that the policy regarding patient referral by

a hospital system to home care and other

ancillary services, which is outlined in the

proposed final judgment for United States v.

Health Choice of Northwest Missouri, Inc., et

al., would be detrimental to this goal. This

judgment, as currently written, would restrict

a patient’s freedom to choose his or her own

home care provider because a patient most

likely would not be made aware of all

qualified providers in the community at the

time of hospital discharge. As a result, the

judgment would conflict with current

Medicare and Medicaid policy that protects
29846 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

patient choice and fair competition (42 USC

§ 1395a) and (42 USC § 1396a(23)).

VNAA requests the DOJ to revise its

judgment to better protect patient choice and

competition by requiring hospitals to present

a written list of local Medicare- and

Medicaid-certified home care and other

ancillary providers to a patient at the same

time that a hospital informs the patient of its

own accredited ancillary services. VNAA

also requests that participating hospitals be

required to provide such patients with a

written explanation of the Medicare and

Medicaid statutes that protect a patient’s

freedom-to-choose his or her provider of

services and the quality standards the listed

certified agencies must meet as specified by

the programs’ conditions of participation.

Thank you for your consideration of our

comments.

Sincerely,

William G. Vanell,

President and CEO.

Home Care Association of America

9570 Regency Square Blvd., Jacksonville, FL

32225, 1–800–386–HCAA

December 1, 1995

Gail Hursh,

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.

Re: United States v. Health Choice of

Northwest Missouri, et al Case No. 95–

6171–CV–SJ–6.

Dear Gail Hursh: I am general counsel for

Home Care Association of America (HCAA)

which represents two hundred forty (240)

home care agencies throughout the United

States with nine (9) in Missouri.

We are very cognizant of hospitals similar

to Heartland Hospital committing similar

offenses and believe that the free standing

home health agencies will not be adequately

protected by the ‘‘DOJ’s Recommended Home

Health, DME, and Hospice Referral Policy for

Heartland Hospital’’.

Under the proposed recommendation, the

Hospital will still have an unfair advantage

over any home care agency not affiliated with

the hospital. The hospital essentially has a

captive audience and has no requirement to

even suggest that there are other home care

agencies in the community that provide

similar services. Under II (B)(2) of the

recommendation, if a patient has not made a

preference, the hospital is in the position to

move the patient directly into their own

service and the patient would never know

the availability of any other service. Patients

coming out of a hospital are generally willing

to do what ever the hospital staff suggest.

To put a requirement on the patient to

make a request for other providers is putting

an undue burden on the patient and the other

providers in the community. Medicare does

not allow advertisement as a reimburseable

cost to providers and therefore because the

hospital has a captive patient, they are able

to inform the patient about their service

without any additional cost. Other providers

are generally precluded from discussing their

services with a patient in the hospital. This

gives the hospital a marked advantage

because the patient has no choice.

We at HCAA would request that you

reconsider your recommendations and

modify them as follows:

The hospital shall not be allowed to self

refer any more than thirty (30) percent of all

the patients which do not have a preference.

Patients not having a preference of a specific

provider would be referred to providers

registered with the hospital on a rotation

basis. Thus no agency could be given

preferential treatment and the hospital would

not monopolize the care for patients who

have not been informed as to the services

available in the community. Any willing

provider qualified under Medicare shall be

allowed placement on the referral list and

shall receive patients on the rotation basis.

We believe that the above referral plan

would be beneficial to all and would not

preclude the hospital from self referral

completely. This also does not disrupt the

hospital by requiring that the other providers

be allowed to discuss their services with

patients prior to the patient leaving the

hospital.

We believe that if you make the above

change to your recommendation it will

preclude a substantial amount of future

litigation in the anti-trust area with hospitals.

We request that you reconsider your

recommendations and include our suggested

change.

If you should have any questions, or would

like to discuss this further, please feel free to

contact me directly.

Sincerely,

H. Kenneth Johnston II,

General Counsel.

cc: Dwight Cenac, Chairman of the Board

NARD Legislative Defense Fund, National

Association of Retail Druggists

205 Daingerfield Road, Alexandria, Virginia

22314

December 1, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, NW, Room 9300,

Washington, D.C. 20530.

Dear Ms. Kursh: The purpose of this

correspondence is to express our concerns

regarding the proposed final judgment for

United States v. Health Choice of Northwest

Missouri, Inc., et al., Case No. 95–6171–CV–

SJ–6 in U.S. District Court for the Western

District of Missouri.

On behalf of our members in Missouri and

throughout the country, we urge you to

support the incorporation in the final

judgment and recommendations of the

Coalition for Quality Health Care, namely:

• to strengthen limitations on the

hospital’s ability to refer its patients to its

own hospital-based components; to require

the hospital to use a rotation system which

assures equitable referrals to all providers in

the area; and

• to require the hospital to permit (on their

premises, during normal working hours,)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and

• to expose the patient population to the

availability of outside services as well; and

• to make the hospital publicly post its

daily referrals to both its hospital-based

entities and to other providers in the

community.

On behalf of more than 75,000

independent retail pharmacists nationwide,

we reiterate our concern that the final

judgment be formulated to assure that

consumers truly have a choice of

competitors.

The ability of the consumer to select the

health care provider or health care entity of

their choice is an essential ingredient in

maintaining a competitive environment in

our marketplace.

Sincerely,

John M. Rector,

Senior Vice President of Government Affairs

and General Counsel.

In The United States District Court, For

The Western District of Missouri

United States of America, Plaintiff, v.

Health Choice of Northwest Missouri, Inc.,

Heartland Health System, Inc., and St.

Joseph Physicians, Inc., Defendants. Civil

Action No. 95–6171–CV–SJ–6.

Motion For Leave To Appear As Amicus

Curiae, File Briefs and Participate In

Hearings On Proposed Final Judgment

The Coalition for Quality Healthcare,

a nonprofit Missouri corporation

organized to assure consumer access to

timely and relevant information and to

promote competitiveness in the health

care field, hereby moves the Court,

pursuant to 15 U.S.C. § 16(b), for leave

to appear as Amicus Curiae in this case

and to file the accompanying

Memorandum of Amicus Curiae in

Opposition to Proposed Final Judgment

in this matter. Amicus also respectfully

requests that it be allowed to present

evidence and participate in oral

arguments in support of its

Memorandum of Amicus Curiae in any

proceedings held by the Court to

determine whether approval of the

proposed Final Judgment is in the

public’s interest.

In support of its Motion, Amicus

attaches and incorporates its

Memorandum of Law.
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29847

Respectfully submitted,

Armstrong, Teasdale, Schlafly & Davis.

Thomas M. Bradshaw, Mo. 20411,

Dianne M. Hansen, Mo. 40356,

1700 City Center Square, 1100 Main Street,

Kansas City, Missouri 64105, (816) 221–3420,

(816) 221–0786 FAX.

and

Glenn E. Davis, Mo. 30308,

Diane E. Felix, Mo. 28439,

One Metropolitan Square, Suite 2600, St.

Louis, Missouri 63102–2704, (314) 621–5070.

Attorneys for Amicus Curiae, The Coalition

for Quality Healthcare

Certificate of Mailing

I hereby certify that a true and correct

copy of the foregoing document was

mailed, postage prepaid, this 1st day of

December, 1995, to the following

counsel of record:

Lawrence R. Fullerton, Esq., Edward D.

Eliasberg, Jr., Esq., Antitrust Division, U.S.

Dept. of Justice, 600 E Street, N.W., Room

9420, BICN Bldg., Washington, D.C. 20530

Thomas D. Watkins, Esq., Watkins, Boulware,

Lucas, Miner, Murphy & Taylor, 3101

Frederick Avenue, St. Joseph, MO 64506–

0217

George E. Leonard, Esq., Shugart, Thomson &

Kilroy, 12 Wyandotte Plaza, 120 West 12th

Street, Kansas City, MO 64105–0509

Richard D. Raskin, Esq., Sidley & Austin, One

First National Plaza, Chicago, IL 60603

Brian B. Myers, Lathrop & Norquist, 2345

Grand Avenue, Suite 2600, Kansas City,

MO 64108

Dianne M. Hansen,

Attorneys for Amicus Curiae, The Coalition

for Quality Healthcare.

In The United States District Court, For

The Western District of Missouri

United States of America, Plaintiff, v.

Health Choice of Northwest Missouri, Inc.,

Heartland Health System, Inc., and St.

Joseph Physicians, Inc., Defendants. Civil

Action No. 95–6171–CV–SJ–6.

Memorandum of Law In Support of

Motion To Appear As Amicus Curiae

and To File Amicus Brief and To

Participate In Proceedings On Proposed

Final Judgment

For the reasons set forth below, the

Coalition for Quality Healthcare,

requests permission to appear as

Amicus Curiae and to file, and to have

the Court consider, the accompanying

Memorandum of Law of Amicus Curiae

in Opposition to the Proposed Final

Judgment in United States v. Health

Choice of Northwest Missouri, Inc., et

al., No. 95–6171–CV–SJ–6.

Amicus also requests the opportunity

to be heard and present evidence at any

hearing scheduled by the Court to

determine whether approval of the

proposed Final Judgment is in the

public’s interest.

Status of Amicus Curiae

The Coalition for Quality Healthcare

(the ‘‘Coalition’’) is a nonprofit Missouri

corporation organized to assure

consumer access to timely and relevant

information and to promote

competitiveness in the healthcare field.

The Coalition is comprised of concerned

citizens and providers of ancillary

healthcare services in Northwest

Missouri, including St. Joseph, Missouri

and its surrounding areas. Members of

the Coalition include owners of longterm care facilities, home health care

agencies, pharmacies, medical

equipment companies, and other service

oriented businesses operating in the

healthcare field.

The Coalition believes that the

proposed Final Judgment is not in the

public’s interest. The terms and

provisions of the ‘‘referral policy’’

which is incorporated into the Final

Judgment, if approved by this Court,

will directly injure members of the

public, including patients who will be

denied the right to make an informed

choice among all available ancillary

services providers, and non-Heartland

ancillary services providers who will be

foreclosed from obtaining business from

patients being discharged from

Heartland’s acute care hospital. The

practical effect of the referral policy is

that Heartland will continue to increase

its monopoly power in the ancillary

services market through predatory

practices and leveraging, causing

antitrust injuries.

On November 22, 1995, pursuant to

the Tunney Act, the Coalition filed its

formal Comment with this Court,

directed to the Department of Justice,

Antitrust Division. Amicus now seeks

the Court’s permission to supplement its

Comment with the attached

Memorandum of Amicus Curiae setting

forth arguments and authorities in

opposition to the proposed Final

Judgment and recommending to the

Court alternative provisions, including a

model referral policy, which the

Coalition believes will better serve the

public’s interest.

Amicus further seeks permission to

participate in any proceedings or

hearings before this Court to determine

whether the proposed Final Judgment is

in the public’s interest.

Statutory Right to Appear as Amicus

Curiae

Under Section 16(f) of the Tunney

Act, 15 U.S.C. § 16, the Court may

authorize full or limited participation in

proceedings before the court by

interested persons or agencies,

including appearance amicus curiae,

intervention as a party pursuant to

Fed.R.Civ.P. 24, examination of

witnesses or documentary materials, or

participation in any other manner and

extent which serves the public interest

as the Court may deem appropriate. Id

§§ 16(f)(3), 16(f)(5).

Courts frequently permit amicus

submissions in Tunney Act

proceedings. See e.g. United States v.

Microsoft Corp., 56 F.3d 1448 (D.C. Cir.

1995); United States v. Airline Tariff

Publishing Co., 1993–1 Trade Cases

¶ 70,191 (D.C. Dist. 1993); United States

v. International Telephone & Telegraph

Co., 349 F.Supp. 22, 26 n.2 (D. Conn.

1972).

The Coalition believes that the

proposed consent decree is of the

greatest possible importance to the

citizens and patients utilizing acute

healthcare services and ancillary

healthcare services in Northwest

Missouri and Northeast Kansas. As

discussed more fully in the

accompanying Memorandum of Amicus

Curiae, the Final Judgment and

Competitive Impact Statement filed by

the Department of Justice fails to

provide the Court with either the factual

or economic analysis necessary for the

Court to determine whether the

proposed decree is sufficient to restore

competition to the managed care

services and ancillary healthcare

services markets within Heartland’s

geographic region. Nor has Heartland

supplied the affidavits of even a single

economist describing the likely

consequences of the proposed referral

policy on the existing ancillary services

market. Compare e.g., United States v.

Western Electric Co., Inc., 993 F.2d

1572, 1578–1582 (D.C. Cir. 1993)

(describing numerous affidavits from

economic experts that provided factual

record for determining whether

proposed decree and modification was

in the public interest).

The Court must look at the

competitive impact of a proposed

judgment upon the public generally and

upon individuals or entities alleging

specific injury from the violations set

forth in the compliant. See 15 U.S.C.

§ 16(3). In the Memorandum of Amicus

Curiae, the Coalition describes in detail,

supported with letters from its

members, the anticompetitive effect that

the proposed consent decree will have

on both ancillary service providers and

non-Heartland physicians, and

economic data indicating that members

of the public have suffered and will

continue to suffer antitrust injuries if

the proposed Final Judgment and the

incorporated referral policy are

approved.
29848 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

1Attached as Exhibit 1 is a copy of the Heartland

Ancillary Services Referral Policy which is

incorporated into the terms of the proposed Final

Judgment.

In view of the paucity of the existing

record, consideration of additional

submissions under Section 16(f) is

particularly appropriate.

Conclusion

For the foregoing reasons, amicus

respectfully requests that the Court

grant it leave to file the accompanying

Memorandum under section 16(f) of the

Tunney Act, 15 U.S.C. § 16, and that the

Court further consider the

Memorandum on the merits in making

its public interest determination under

Section 16(e). Finally, amicus

respectfully requests that the Court

allow it to present evidence and

participate in any proceedings before

this Court to determine whether the

proposed Final Judgment is in the

public’s interest.

Respectfully submitted,

Armstrong, Teasdale, Schlafly & Davis

Thomas M. Bradshaw, Mo. 20411

Dianne M. Hansen, Mo. 40356

1700 City Center Square, 1100 Main Street,

Kansas City, Missouri 64105, (816) 221–3420,

(816) 221–0786 FAX.

and

Glenn E. Davis, Mo. 30308

Diane E. Felix, Mo. 28439

One Metropolitan Square, Suite 2600, St.

Louis, Missouri 63102–2704, (314) 621–5070.

Attorneys for Amicus Curiae, The Coalition

for Quality Healthcare

Certificate of Mailing

I hereby certify that a true and correct

copy of the foregoing document was

mailed, postage prepaid, this 1st day of

December, 1995, to the following

counsel of record:

Lawrence R. Fullerton, Esq., Edward D.

Eliasberg, Jr., Esq., Antitrust Division, U.S.

Dept. of Justice, 600 E Street, N.W., Room

9420, BICN Bldg., Washington, D.C. 20530

Thomas D. Watkins, Esq., Watkins, Boulware,

Lucas, Miner, Murphy &Taylor, 3101

Frederick Avenue, St. Joseph, MO 64506–

0217

George E. Leonard, Esq., Shugart, Thomson &

Kilroy, 12 Wyandotte Plaza, 120 West 12th

Street, Kansas City, MO 64105–0509

Richard D. Raskin, Esq., Sidley & Austin, One

First National Plaza, Chicago, IL 60603

Brian B. Myers, Lathrop & Norquist, 2345

Grand Avenue, Suite 2600, Kansas City,

MO 64108

Dianne M. Hansen,

Attorneys for Amicus Curiae, The Coalition

for Quality Healthcare.

In the United States District Court, for

the Western District of Missouri

United States of America, Plaintiff, v.

Health Choice of Northwest Missouri, Inc.,

Heartland Health System, Inc., and St.

Joseph Physicians, Inc., Defendants. Civil

Action No. 95–6171–CV–SJ–6.

Order

On Motion for Leave to Appear as

Amicus Curiae in the above matter

brought by the Coalition for Quality

Healthcare, and for good cause shown,

IT IS HEREBY ORDERED that the

Coalition for Quality Healthcare is

hereby granted leave to appear as

Amicus Curiae in this case, including

the right to file briefs, participate in oral

arguments and present evidence at any

hearings scheduled by the Court to

determine whether approval of the

proposed Final Judgment is in the

public’s interest.

IT IS SO ORDERED.

HON. HOWARD F. SACHS,

Sr. U.S. District Judge.

In the United States District Court, for

the Western District of Missouri

United States of America, Plaintiff, v.

Health Choice of Northwest Missouri, Inc.,

Heartland Health System Inc., and St. Joseph

Physicians, Inc., Defendants. Civil Action No.

95–6171–CV–SJ–6.

Memorandum of Amicus Curiae in

Opposition To Proposed Final Judgment

Armstrong, Teasdale, Schlafly & Davis

Thomas M. Bradshaw, Mo. 20411,

Dianne M. Hansen, Mo. 40356,

1700 City Center Square, 1100 Main Street,

Kansas City, Missouri 64105, (816) 221–3420,

(816) 221–0786 FAX.

and

Glenn E. Davis, Mo. 30308,

Diane E. Felix, Mo. 28439,

One Metropolitan Square, Suite 2600, St.

Louis, Missouri 63102–2704, (314) 621–5070.

The Coalition for Quality Healthcare

(the ‘‘Coalition’’), as amicus curiae,

submit for the Court’s consideration and

information the following arguments

and authorities in opposition to the

proposed Final Judgment in this matter.

I. Background

The Antitrust Division of the

Department of Justice (‘‘DOJ’’) has

determined that between April 14, 1986

and June 9, 1995, Health Choice of

Northwest Missouri, Inc. (‘‘Health

Choice’’), Heartland Health System, Inc.

(‘‘Heartland’’), St. Joseph Physicians,

Inc. (‘‘SJPI’’) and others acted in concert

to restrain or prevent the development

of competitive managed health care

programs in Buchanan County,

Missouri, Complaint, ¶ 25. The DOJ

found that this anticompetitive conduct

constitutes an unreasonable restraint of

price and other competition among

managed care plans and among

physicians in Buchanan County, which

deprives consumers and third-party

payers of the benefits of free and open

competition in the purchase of health

care services in Buchanan County.

Complaint, ¶ 27.

The Coalition is a nonprofit Missouri

corporation organized to assure

consumer access to information and to

promote competition in the healthcare

field. It is comprised of concerned

citizens and providers of ancillary

healthcare services in Northwest

Missouri, including St. Joseph, Missouri

and its surrounding areas. Members of

the Coalition include owners of longterm care facilities, home health care

agencies, pharmacies, medical

equipment companies, and other service

oriented businesses operating in the

healthcare field. The Coalition believes

that the deleterious effects of

defendants’ anticompetitive conduct

reaches beyond those enumerated in the

Complaint and impacts not only the

consuming public and physicians, but

also all ancillary services providers

operating within Heartland’s geographic

region who are not affiliated with

Heartland.

The Coalition understands that the

principal focus of the DOJ’s

investigation resulting in the proposed

consent judgment related to defendants’

efforts to interfere with managed care

programs, and that the subject of

ancillary services arose very late in the

investigation process. It is noteworthy

that the Complaint before the Court

makes no reference to ancillary services

at all. The DOJ has informed the

Coalition that it has no ‘‘determinative

materials’’ from the investigation

concerning the ‘‘referral policy’’ referred

to in the Final Judgment. In sum, as the

proposed judgment relates to ancillary

services, the Coalition believes that the

referral policy itself is beyond the scope

of the Complaint, is an ill-advised

addition to the proposed consent

judgment, and is included in the

proposed judgment without adequate

investigation and attention to its

consequences. Accordingly, the

Coalition’s objections to the proposed

Final Judgment, and in particular the

referral policy it includes, are both

procedural and substantive in nature.

As discussed in this Memorandum,

the proposed Final Judgment, which

incorporates Heartland’s ancillary

services ‘‘referral policy’’ 1 into its

terms, is not in the public’s interest

because it violates a consumer/patient’s

right to make an informed choice among

all ancillary services providers and

because the referral policy enhances

Heartland’s capacity to monopolize the
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29849

2A copy of the Comment filed by the Coalition

for Quality Healthcare with the Department of

Justice is attached as Exhibit 2.

3As a sponsor of the Act, Senator Tunney

declared: ‘‘Specifically, our legislation will * * *

make our courts an independent force rather than

a rubber stamp in reviewing consent decrees, and

it will assure that the courtroom rather than the

backroom becomes the final arbiter in antitrust

enforcement.’’ The Antitrust Procedures and

Penalties Act: Hearings on S. 782 and S. 1088

before the Subcommittee on Antitrust and

Monopoly of the Committee on the Judiciary, 93d

Cong., 1st Sess. (1973).

4See, e.g., United States v. Westinghouse Elec.

Corp., 1988 WL 47345 (D.D.C.); United States v.

Bechtel Corp., 1979 WL 158 (N.D. Cal.), aff’d 648

F.2d 660 (9th Cir. 1981), cert. denied, 454 U.S.

1083; United States v. Mid-America Dairymen, Inc.,

1977 WL 4352( W.D. Mo.).

5To facilitate its review, the district court may

‘‘authorize full or limited participation in

proceedings before the court by interested persons

or agencies.’’ 15 U.S.C. § 16(f)(3). United States v.

BNS, Inc., 858 F.2d 456, 459 (9th Cir. 1988).

6The court can also condition approval of a

consent decree on the Antitrust Division’s making

available information and evidence obtained by the

government to potential, private plaintiffs which

will assist in the effective prosecution of their

claims. United States v. Associated Milk Producers,

Inc., 394 F.Supp. 29, 45 (W.D. Mo. 1975), citing U.S.

Code Cong. and Admin. News 1974, 93rd Cong. 2nd

Sess., pp. 6538–39.

7By letter of November 13, 1995, the Coalition

requested the Department of Justice to produce a

list of determinative materials to its counsel. (See

Exhibit 3, attached.)

8On November 21, 1995, the Department of

Justice, Antitrust Division, responded to the

Coalition that the Department had determined that

no such materials or documents existed. (See

Exhibit 4, attached.)

9Frequently, patients will have no immediate

preference among downstream suppliers because

they remain too ill to make a rational choice,

because they lack information about the

competitive attributes of different suppliers,

because the information they do have provides little

objective guidance about the services provided by

different companies, or because the cost of the

products and services will be paid by third party

payors and thus little incentive exists to engage in

price comparisons. Or the patient simply may place

Continued

ancillary services market within

Northwest Missouri and Northeast

Kansas. Further, the proposed Final

Judgment lacks an effective, affirmative

Compliance Program since it relies

solely on ‘‘self-reporting’’ by the

defendants. Finally, the Final Judgment

contains no provisions detailing the

manner in which alleged violations of

the consent decree should be brought

before the Court for appropriate judicial

enforcement proceedings.

For these reasons, as set forth in the

Comment previously filed by Amicus on

November 22, 1995,2 and as set forth

more fully below, amicus curiae

opposes the proposed Final Judgment.

II. The Permissible Scope of This Court’s

Review

In 1974, Congress enacted the

Antitrust Procedures and Penalties Act

(‘‘APPA’’), also known as the Tunney

Act, 15 U.S.C. §§ 16 (b)–(h) (1995), out

of concern with ‘‘prior practice, which

gave the [Justice] Department almost

total control of the consent decree

process, with only minimal judicial

oversight.’’ United States v. American

Tel. & Tel., 552 F.Supp. 131, 148

(D.D.Cir. 1982), aff’d sub nom.,

Maryland v. United States, 460 U.S.

1001 (1983). Congress sought to

eliminate ‘‘judicial rubber stamping’’ of

such consent decrees 3 by providing that

‘‘before entering any consent judgment

* * * the court shall determine that the

entry of such judgment is in the public

interest.’’ 15 U.S.C. § 16(e).

The legislative history of the Tunney

Act shows that Congress did not intend

the court’s action to be merely pro

forma. United States v. Gillette Co., 406

F.Supp. 713, 715 (D. Mass. 1975). When

the government and putative

defendant(s) present a proposed consent

decree to the district court for review

under the Tunney Act, the court can

and should inquire into the purpose,

meaning and efficacy of the proposed

decree. U.S. v. Microsoft Corp., 56 F.3d

1448, 1462 (D.C.C. 1995). Moreover, if

third parties contend that they have

been positively injured by the decree, a

district judge should hesitate before

assuming that the decree is appropriate.

Id. Similarly, a district court is expected

to closely scrutinize the compliance

mechanisms of a proposed consent

decree. Id.

In making its inquiry, many courts

have held hearings,4 with testimony of

experts, witnesses, and interested

persons,5 and ordered the DOJ to

produce its ‘‘determinative’’ documents

and materials to interested parties, as

required by Section 16(b) of the Tunney

Act.6 For example, in United States v.

Central Contracting Co., Inc., 537

F.Supp. 571 (1982), the DOJ asserted

that ‘‘there were simply no documents

or materials * * * that contributed

materially to the formulation of the

proposed relief.’’ Id. at 573. The district

court found the government’s assertion

disingenuous in light of the

government’s similar claims in 172 out

of 188 prior cases that it considered

neither documents nor any materials

determinative. Id. at 577. The Court

refused to blandly (and blindly) accept

the government’s certification that no

documents or materials led to the

government’s determination that it

should enter into a consent decree. Id.

at 575. Rather, the Tunney Act required

a ‘‘good faith review of all pertinent

documents and materials and a

disclosure’’ of those materials called for

by the Act. Id. at 577.

A pro forma approval is certainly not

warranted here. The well-publicized

and lengthy investigation into the

defendants’ activities has resulted in a

proposed final judgment that reaches

beyond the DOJ’s managed care

investigation and includes a wholly

deficient referral policy relative to

ancillary services. Amicus curiae

formally requested copies of any

‘‘determinative’’ materials or documents

from the DOJ so that its counsel could

properly evaluate the terms and

conditions of the proposed Final

Judgment and Competitive Impact

Statement.7 The Department of Justice

denied that any such documents exist.8

Accordingly, the Court should carefully

evaluate whether this is in the public

interest, particularly when the DOJ has

not been forthcoming with disclosure of

the underlying factual materials

supporting the proposed policy.

Amicus respectfully requests the

Court to hold a hearing to determine

whether the proposed consent decree is

in the public’s interest and to allow

amicus to present evidence, including

testimony, to support its arguments, as

outlined below, that the consent decree

is not in the public’s interest.

III. Arguments and Authorities

A. The Final Judgment is not in the

public’s interest because the

incorporated Heartland Referral Policy

prevents patients from making an

informed choice regarding ancillary

services.

Heartland has diversified into the

ancillary services market and now

owns, operates or otherwise controls or

is affiliated with various ancillary

services providers including a skilled

nursing facility, a rehabilitation facility,

a pharmacy, and a home health care

agency. Heartland now competes with

other ‘‘downstream providers’’ in the

ancillary services market and, through

its referral policy and discharge

practices, unfairly monopolizes that

market by ‘‘steering’’ or ‘‘channeling’’ its

patients to its affiliated ancillary

services providers. The channeling of

patient choice is sufficient to show

injury to consumers and a violation of

the antitrust laws. Key Enterprises of

Delaware, Inc., 919 F.2d 1550, 1559

(11th Cir. 1990), vacated with

instructions to dismiss (due to postappeal settlement of case), 9 F.3d 893

(11th Cir. 1993).

Anticompetitive steering tactics

include, but are not necessarily limited

to, referring all business to the hospitalaffiliated service providers when the

patient is offered no meaningful choice

among competing suppliers; 9 refusing
29850 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

substantial trust in the hospital or its doctor and

thus select its affiliated company because of its

affiliation with the hospital. J. Miles, Health Care

& Antitrust Law, ‘‘Provider Diversification,’’ ch. 14,

§ 14.01 (Clark, Boardman & Callaghan 1995).

10Attached as Exhibit 5 for the Court’s

convenience is a copy of the Key Enterprises

opinion which contains a thorough discussion of

anticompetitive practices such as ‘‘channeling’’ and

‘‘leveraging’’ in a hospital diversification case.

to make available materials concerning

the services of competing suppliers; and

permitting hospital-affiliated service

providers access to patients needing

ancillary services but denying access to

competitors. See J. Miles, Health Care &

Antitrust Law, ‘‘Provider

Diversification,’’ ch. 14 § 14.01 (Clark,

Boardman & Callaghan 1995).

The antitrust laws do not require the

consumer to suffer some form of direct

or immediate monetary damage before a

defendant’s anticompetitive conduct is

actionable. Being denied equal access to

services is sufficient to violate the

antitrust laws. See Aspen Skiing

Company v. Aspen Highlands Skiing

Corp., 472 U.S. 585, 105 S.Ct. 2847,

2859–60 (1985) (consumers injured by

not having easy access to all four skiing

mountains); see also Association of

General Contractors of Cal. v. California

St. Council of Carpenters, 459 U.S. 519,

103 S.Ct 897, 903 (1983) (‘‘coercive

activity that prevents its victims from

making free choices between market

alternatives is inherently destructive of

competitive conditions and may be

condemned even without proof of its

actual market effect.’’).

In Key Enterprises, a hospital, after

forming a durable medical equipment

company (‘‘DME’’) joint venture, steered

its patients needing DME to the venture.

The hospital changed two longstanding

policies after the venture was formed.

First, although no DME vendors had

been permitted access to hospital

patients prior to the venture, only

representatives of the venture were

permitted access to patients needing

DME afterward. Second, although

independent home health nurses had

been primarily responsible for selecting

the appropriate DME vendor prior to the

venture, a representative of the venture

subsequently took that responsibility.

In addition, the hospital instituted a

default policy by which patients

without a preference of a DME supplier

would be referred to the venture

automatically whereas a rotation system

among DME vendors had been used

previously. Id. at 1558. As a result of

these practices, the DME venture’s

market share promptly increased from

about 9 percent prior to the venture

with the hospital to around 61 percent,

while the competing DME’s market

share decreased from about 73 percent

to 30 percent. Moreover, 64 percent of

the venture’s business consisted of the

hospital’s patients and about 85 percent

of all hospital referrals for DME went to

the venture. Id. at 1566. In upholding a

jury verdict on the attempted

monopolization claim, the appeals court

held that the hospital’s conduct was

predatory and sufficient to show a

dangerous probability of

monopolization. Id.10

The proposed Final Judgment in this

case entrenches the defendants’ ability

to engage in anticompetitive practices

and to violate the antitrust laws because

it requires Heartland physicians to

‘‘observe the attached and incorporated

Heartland referral policy relating to the

provision of ancillary services.’’ Final

Judgment, VII (B)(1). That referral policy

impermissibly steers or channels

Heartland patients to Heartlandaffiliated ancillary services providers:

(1) The policy allows the doctor to

initially order that a particular ancillary

services provider be used, rather than

allow the patient to choose freely among

any of the ancillary services providers

in the Northwest Missouri area. Because

Heartland employs or is otherwise

associated with the majority of

physicians with staff privileges at

Heartland’s hospital, doctors will

routinely order Heartland ancillary

services providers for the patient.

Hospital patients requiring ancillary

services are frequently elderly, in ill

health and are unlikely to question, let

alone contest, a doctor’s order, or to

understand the basis for the

recommendation or any underlying

conflict of interest.

(2) Even if the doctor does not

designate a certain ancillary services

provider, the patient is nonetheless

‘‘steered’’ to Heartland because the

patient is only informed that Heartland

has excellent, fully accredited ancillary

services available and then the patient

is given a Heartland brochure. The

patient is not informed about the

availability of any competing ancillary

services providers in the Northwest

Missouri area.

(3) If the patient rejects Heartland’s

ancillary services providers, or

specifically asks what other providers

are available, the patient is not given the

names of or any information about nonHeartland providers. Rather, the patient

is told that Heartland cannot provide

any information about or recommend

any of the other ancillary services

providers and the patient is then merely

referred to the telephone book to look

for other providers.

If a firm attempts to exclude rivals on

some basis other than efficiency, it is

fair to characterize its behavior as

‘‘predatory.’’ Aspen Skiing Company v.

Aspen Highlands Skiing Corp., 472 U.S.

585, 605 (1985). The predatory effect of

Heartland’s mandated referral policy is

that consumers are channeled to

Heartland-affiliated ancillary services

providers, rather than being given

timely and equal access to sufficient

information on all ancillary services

options and quality to be allowed to

make an informed choice among those

options. The presence of the referral

policy in the proposed Final Judgment

is a thinly-disguised but calculated

effort to obtain the imprimatur of the

Court’s approval on a referral policy

designed to maintain entry barriers to

other ancillary service providers and

enhance the defendants’ market power.

B. Heartland, through its Referral Policy,

effectively monopolizes the ancillary

services market within Heartland’s

geographic service region, resulting in

antitrust injury to consumers and other

ancillary services providers.

The proposed Final Judgment and its

incorporated referral policy impair

competition in an unnecessarily

restrictive way by foreclosing competing

ancillary services providers from

obtaining access to patients being

discharged from acute care. The effect

on competing ancillary service

providers is devastating, because

patients being discharged from acute

care are a critical source of business for

competing ancillary services providers.

The effect of the referral policy is

especially onerous because Heartland is

the only acute care facility located in

Buchanan County, Missouri. The closest

comparable facility is North Kansas City

Hospital, located in Clay County,

Missouri, 60 miles south of St. Joseph.

To the extent that Heartland patients

are systematically and successfully

‘‘steered’’ to Heartland affiliated service

providers, competitors will be

foreclosed from that source of patients.

This raises serious antitrust concerns

because there may be an insufficient

number of remaining referrals for

competitors to remain viable. The

hospital-affiliated ancillary services

providers are already obtaining a

substantial market share and an

unwarranted degree of market power in

the ancillary services market, enabling

them to raise and sustain prices above

(or lower quality below) levels that

would be achieved in a truly

competitive marketplace.

Although firms have no duty under

the antitrust law to promote their

competitors, there are recognized

exceptions to this rule in hospital

diversification cases. One exception,
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29851

11Attached as Exhibit 6 are letters from various

ancillary services providers who compete with

Heartland in the Joseph, Missouri service provider

area, objecting to the proposed Final Judgment and

explaining the direct impact of the Referral Policy

on those providers.

12See Exhibit 6. Carriage Square Health Care

Center reports that medicare patient days decreased

from 5,689 in 1989 to 91 in 1995; St. Joseph

Convalescent Center reports a loss of 1,302 patient

days in 1993–94, 1,369 patient days in 1994–95,

and 1,091 patient days between July, 1995 and

September, 1995; Tiffany Square Convalescent

Center reports that its occupancy rate dropped from

93.5% in 1993 to 79.7% in 1995; and Caregivers

Home Health, Inc. reports that hospital patient

referrals for home health care dropped from a high

of 22 patients per month to a low of 8 patients per

month during the period January, 1994 to July,

1995.

13See Exhibit 7, 1994 Home Health Agency

Annual Reports for Heartland Home Care,

Caregivers Home Health, Inc., Benders Home Care,

Inc. and Kendallwood Home Health. [Note that the

patient census figures for Kendallwood have been

reduced by 50% on the Recap Sheet #1 to reflect

only Kendallwood’s St. Joseph agency, since

Kendallwood operates another agency outside of

the St. Joseph, Missouri region].

14See Exhibit 6, letters from Lipira Pharmacy

indicating a yearly loss in revenue of between

$80,000 to $100,000 due to loss of patients to

Heartland’s skilled nursing facility or Heartland’s

rehabilitation facility.

15Attached as Exhibit 8 is a copy of the Final

Rule, published in 59 Fed. Reg. 64141 (December

13, 1994).

applicable to the Heartland case, is

where a hospital ‘‘leverages’’ its market

power in one market (the ‘‘upstream’’

acute care market) to obtain a

competitive advantage in a second

separate market (the ‘‘downstream’’

ancillary services market). See e.g.,

Advanced Health-Care Services, Inc. v.

Radford Community Hospital, 910 F.2d

139 (4th Cir. 1990) (hospital with

monopoly power in the market for acute

care hospital services can use that

power to foreclose competition and gain

unfair competitive advantage in the

downstream market for ancillary

services and DME); Key Enterprises, 919

F.2d at 1566–68.

The terms and the practical effect of

Heartland’s referral policy allow

Heartland to gain an unfair competitive

advantage in the ancillary services

market. Comments and data supplied by

competitors of Heartland-affiliated

ancillary services underscore the

concerns about the anticompetitive

aspects of the proposed consent

decree.11 Specific examples of these

concerns follow.

Patients from private (non-Heartland)

long-term care facilities who are

transferred to Heartland’s hospital for

acute care are not returned to the private

long-term care facility upon discharge,

even if the patient had been a long term

resident of the private facility. Rather,

the patients are transferred to either

Heartland’s skilled nursing facility,

which charges a higher daily rate than

comparable facilities in the community,

or to Heartland’s rehabilitation center.

The patients are then kept in these

Heartland care facilities until their

Medicare coverage is exhausted. The

patients are only returned to their

former private facility if Heartland does

not want them or if there is no Medicare

coverage or private source of payment

for the patient’s care.

Patients of private home health care

agencies experience similar exclusion

from their prior provider. Patients who

have been cared for by a non-Heartland

home health care agency prior to being

admitted to Heartland’s hospital are not

returned to that agency upon discharge.

Instead, patients are being directed to

Heartland’s home health care unless the

patient objects to the doctor’s order or

recommendation to use Heartland. The

patients in question are often elderly,

infirm and vulnerable, and may be

unaware that they can object to a change

in home health care providers and insist

that their former agency resume care

upon the patient’s discharge, or unable

to assert their right to do so.

Heartland hospital staff do not give

notice to a patient’s prior ancillary

services provider when that patient is to

be discharged from the hospital. In some

instances, prior providers report that

their patients have been home for two

to four days with no follow-up care by

their home health care agency because

the hospital failed to notify the former

provider of the patient’s discharge. This

is grossly harmful to the patient and

greatly affects the quality of the patient’s

care.

C. The Final Judgment contributes to

cause direct antitrust injury to the

public.

Owners of private long-term care

facilities and home health care agencies

uniformly report a significant loss in

revenue, patient census and hospital

referrals since Heartland began its

referral policy.12 Figures obtained from

the 1994 Home Health Agency Annual

Report show that among four competing

home health care agencies operating in

the St. Joseph, Missouri region,

Heartland Home Care admitted almost

300 more new patients to its home

health care service than its next closest

competitor in St. Joseph, Missouri.13

An institutional pharmacy which

serves 60 private (non-Heartland)

nursing homes in St. Joseph and the

surrounding area has lost significant

amounts of business due to the overall

loss of private nursing home patients to

the Heartland system.14 Heartland’s

own pharmacy services the needs of

patients using Heartland’s ancillary

services.

The Coalition believes these

developments are not the result of

Heartland’s provision of superior or

more efficient care or services. Rather,

these trends reflect the effects of the

referral policy, discharge practices, and

other conduct by Heartland to steer

patients to its own services and those of

its affiliates.

D. Heartland’s Referral Policy is

inconsistent with federal regulations

related to Discharge Planning that

govern Medicare and Medicaid

hospitals and with standards of the Joint

Commission for Accreditation of

Healthcare Organizations

(‘‘accreditation standards’’) to which

Heartland subscribes.

Heartland’s referral policy does not

allow ancillary services providers, who

have an established relationship with

the patient before admission to

Heartland’s acute care hospital, to

participate in discharge planning for

their patients, thus preventing the

providers from competing in the

marketplace for the patient’s business.

Providers are given no notice of their

patient’s discharge by Heartland and

have been specifically denied the

opportunity to participate in discharge

planning meetings for their patients.

Heartland’s referral policy is

inconsistent with new federal

regulations pertaining to discharge

planning for the patient and with

accreditation standards pertaining to

informed consent by patients.

Effective January 12, 1995, the Health

Care Financing Administration (HCFA)

issued new regulations adopting more

specific patient discharge planning

standards for hospitals participating in

Medicare and Medicaid programs. 42

CFR § 482.43.15 The new regulations

require, among other things, that a

Medicare/Medicaid participating

hospital:

(1) Identify at an early stage of

hospitalization those patients likely to

suffer adverse health consequences

without discharge planning. § 482.43(a).

(2) Provide a ‘‘discharge planning

evaluation’’ to such patients and to

others upon request, which must

include an evaluation of:

(a) The likelihood of a patient needing

post-hospital services and of the

availability of the services.

§ 482.43(b)(3).

(b) The likelihood of a patient’s

capacity for self-care or of the patient

being cared for in the environment from
29852 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

16As of the date of filing this Memorandum, the

HCFA had not yet issued new Interpretive

Guidelines incorporating the referenced

requirement.

17 Joint Commission for Accreditation of

Healthcare Organizations, ‘‘Patient Rights and

Organizational Ethics,’’ § 1 (1995).

which he or she entered the hospital.

§ 482.43(b)(4).

(3) Discuss the results of the

evaluation with the patient or

individual acting on his or her behalf.

§ 482.43(b)(6).

(4) If the evaluation indicates the need

for a discharge plan, an RN, social

worker, or other appropriately qualified

personnel must develop such a plan.

§ 482.43(c)(1);

(5) As needed, the patient and family

members or interested persons must be

counseled to prepare them for posthospital care. § 482.43(c)(5).

The hospital has an obligation under

these new regulations to evaluate the

patient’s capacity to return to the prehospitalization environment, which

necessarily includes the ancillary

services providers involved with the

patient’s care before the hospitalization.

If the patient elects to return to the care

of the same ancillary service provider as

before hospitalization, it is reasonable to

consider that pre-hospitalization

ancillary services provider to be an

‘‘interested person’’ who must be

‘‘counseled’’, i.e. advised of the planned

discharge date for the patient, in order

to assure that appropriate arrangements

are made on a timely basis.

One of the comments discussed by the

HCFA in the Order of Rulemaking

suggests that the hospital be required to

give each patient the full range of

options to consider for post-hospital

care. In responding, HCFA stated that:

‘‘In most instances the focus on a return

to the prehospitalization environment is

a valid one, serving the interests of the

patient within available community

resources.’’ HCFA concluded that the

new regulation did not preclude a

patient from being offered a full range

of options to consider for post-hospital

care and determined that no further

change to the regulation was necessary.

64 Fed. Reg. 64147. The HCFA also

agreed to incorporate, into the HCFA’s

‘‘Interpretive Guidelines’’ covering

discharge planning, the requirement

that the hospital should ‘‘maintain

complete and accurate information on

community long-term care services and

facilities for advising patients and their

representatives of their options.’’ 59

Fed. Reg. 64148.16

The Joint Commission for

Accreditation of Healthcare

Organizations (‘‘JCAHO’’) has

established standards for accredited

hospitals governing Patient Rights and

Organization Ethics, with the stated goal

of helping to ‘‘improve patient outcomes

by respecting each patient’s rights and

conducting business relationships with

patients and the public in an ethical

manner’’.17 An accredited hospital is

required to obtain informed consent for

all patient care, including discharge

planning services. JCAHO Standard

RI.1.2.1. The stated JCAHO intent for

this requirement is to ensure that the

hospital’s staff clearly explain to the

patient and, when appropriate, the

patient’s family, ‘‘any professional

relationship to another health care

provider or institution that might

suggest a conflict of interest.’’ JCAHO

Standard RI.1.2.1. This standard

requires Heartland’s physicians or other

staff members treating the patient, to

explain to the patient any business

relationships between the treating

physician or hospital and any other

organization of health care service

involved in the patient’s care, including

Heartland’s affiliation with certain

ancillary service providers.

Moreover, an accredited hospital must

operate according to a code of ethical

behavior. JCAHO Standard RI.4. The

JCAHO’s stated intent for this standard

is that a hospital must conduct its

business patient care activities in an

honest, decent, and proper manner,

which includes marketing, admission,

transfer, and discharge functions.

JCAHO Standards RI.4

Heartland’s referral policy, the

manner in which it manages discharge

planning functions, and related conduct

are inconsistent with both the HCFA

regulations and the JCAHO standards.

E. The Court should strike the Referral

Policy from the Final Judgment, or in

the alternative, order Heartland to adopt

a revised policy such as the ‘‘Model

Referral Policy’’ submitted by Amicus

Curiae.

For those reasons set forth in Part III

(A) to (D) above, amicus urges the Court

to strike Heartland’s referral policy from

the terms and conditions of the

proposed Final Judgment. The referral

policy is not a necessary component for

the protection of managed care, the

principal thrust of the proposed

judgment and the entire focus of the

Complaint. Even if it does relate to

managed care issues, however, it should

be rejected as inappropriate. In the

alternative, amicus respectfully suggests

that the parties adopt or the Court

impose a substitute referral policy

whose terms and conditions are similar

to those set forth in the ‘‘Model Referral

Policy’’ attached to this Memorandum

as Exhibit 9.

Anticompetitive concerns, whether

directly related to managed care or not,

can best be met through a referral policy

that affords each patient equal access to

and information about all ancillary

services available within Heartland’s

geographic region. By the same token,

the policy should provide ancillary

services providers equal access to

Heartland patients. Amicus curiae

strongly believes that its Model Referral

Policy achieves these objectives. The

highlights of the policy include the

following provisions:

1. The hospital must commit to

promote and support a patient’s right to

make an informed choice by ensuring

that its staff and employees implement

and follow the terms of the referral

policy.

2. The policy is to be administered

and monitored by an independent social

worker or ‘‘ombudsman,’’ whose salary

and expenses could be shared equally

among the competitors (including

Heartland), in order to preserve the

ombudsman’s independence.

3. When ancillary services are ordered

by a physician, the ombudsman must

fully inform the patient of all options for

ancillary services within Heartland’s

geographic region and insure that a

patient’s choice of provider is honored.

4. When a patient is admitted to

Heartland’s hospital from a private longterm or skilled nursing facility, or if a

patient is a current client of a home

health care agency, that provider’s name

should be noted on the patient’s chart.

Prior ancillary services providers must

be notified of and encouraged to

participate in any discharge planning

for their patients.

5. All ancillary services providers will

be allowed access to Heartland patients

who request contact with that provider,

or if the patient is a current client of that

provider. Further, all ancillary services

providers should be allowed to supply

the ombudsman with brochures about

their services which will be available to

the patient, but not to competing

ancillary services providers.

A referral policy embracing the

foregoing provisions would promote

healthy competition in the ancillary

services market and ‘‘level the playing

field.’’

F. The terms of the Final Judgment give

unfair competitive advantage to

Heartland in the primary care physician

market.

Other terms and conditions of the

Final Judgment give unfair competitive

advantage to Heartland in the primary

care physician market. Specifically,
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29853

under the terms of the proposed consent

decree, Heartland is allowed to employ

or acquire, without preapproval from

the DOJ, an unlimited number of

physicians who are not currently

located in Buchanan County, so long as

less than 20% of the physician’s income

was derived from patients living in

Buchanan County. Final Judgment, Part

VIII (B).

Further, the consent decree does not

limit the number of new doctors that

Heartland can bring into Buchanan

County to work for Heartland (as

employees or through acquiring their

practice), so long as Heartland incurs

substantial costs in recruiting the

doctors, or gives them substantial

financial support or income guarantees.

Even though the acquisitions require

prior notice to the government, approval

will be given if the financial criteria are

met. Final Judgment, Part VIII (C).

Finally, the consent decree allows

Heartland, with prior DOJ approval, to

acquire the practice or employ any

physician who finds he or she cannot

practice in Buchanan County unless

hired by Heartland. Final Judgment, Part

VIII (D).

The foregoing provisions enable

Heartland to further enhance its

monopoly power and regional control of

physician services, i.e. if independent

physicians cannot compete successfully

with doctors owned by Heartland, they

have to join Heartland to survive. The

practical effect of the foregoing

provisions is that Heartland’s physician

base will continue to grow and

monopolize the market for primary care

physicians in Northwest Missouri and

Northeast Kansas, leaving sole

practitioners with little choice but to

join Heartland or move their practices

elsewhere. One can scarcely posit a

clearer example of single firm power to

control price and exclude competition.

Amicus curiae urges the Court to

scrutinize the terms of the proposed

Final Judgment and Competitive Impact

Statement in light of the fact that neither

the DOJ nor the defendants have

produced any studies, surveys, or other

economic data, or even any affidavits

from economists, to show that the

proposed decree will result in an

increase in competition in the managed

care program market, the primary care

physician market, or the ancillary

services market, or that the decree will

prevent Heartland from monopolizing

the remainder of those markets. Amicus

accordingly urges the Court to require

further submissions from the DOJ both

by way of expert affidavits and the

production of documents and economic

data, to explain how permitting

Heartland to continue to acquire

unlimited numbers of primary care

physicians and to continue to allow its

physicians to channel Heartland

patients to Heartland-affiliated ancillary

services providers, can be argued to be

in the ‘‘public interest.’’

G. The proposed Final Judgment lacks

an effective and affirmative Compliance

Program and enforcement provisions.

The proposed consent decree lacks

accountability provisions to ensure that

Heartland hospital patients, and

patients of Heartland’s physicians, are

being given sufficient, unbiased

information to allow the patient to make

an informed choice among all available

ancillary services providers. Moreover,

the Compliance Program set forth in the

proposed Final Judgment requires only

self-reporting of Heartland’s proposed

acquisitions or other actions covered by

the Final Judgment and an annual

certification by the defendants that the

Final Judgment terms are being adhered

to. Final Judgment, § X. Although the

DOJ is given what it already has—

‘‘access’’ to the defendants’ records and

personnel and the right to obtain written

reports from the defendants—there is no

requirement that written reports be

made to the DOJ by any of the

defendants, and no requirement that the

Department will conduct periodic or

even annual inspections of books and

records and interview of personnel.

Without an affirmative requirement of

regular, periodic written reports or

government inspections to determine

compliance, it will be virtually

impossible to determine whether

violations of the terms and provisions of

the Final Judgment have occurred.

In addition to lacking effective

compliance provisions, the proposed

Final Judgment provides no judicial

mechanism to monitor and enforce the

final judgment if its terms are violated.

In United States v. Associated Milk

Producers, Inc., 394 F.Supp. 29 (W.D.

Mo. 1975), Judge Oliver addressed these

very concerns, finding that ‘‘many

persons who may be affected by a

consent decree simply do not possess

and are not furnished with any

information in regard to the manner in

which alleged violations of a final

judgment entered upon a proposed

consent decree are to be brought before

the Court for appropriate judicial

enforcement proceedings.’’ Id. at 46. To

remedy this situation, Judge Oliver

entered a Supplemental Order

establishing enforcement and

modification procedures to be followed

in the event of violations by the

defendants of the final judgment.

Similar, appropriate judicial

enforcement provisions should be

crafted by the Court and included in the

Final Judgment, or as a Supplementary

Order, in this proceeding.

IV. Conclusion

The proposed Final Judgment is not

in the public’s interest because it fails

to address adequately, much less

remedy, the foregoing concerns about

the Heartland referral policy,

Heartland’s physician practice and

recruitment efforts, and Heartland’s

other conduct, which create conditions

that facilitate unlawful maintenance of

monopoly power by Heartland through

anticompetitive and coercive means,

conditions conducive to a successful

attempt by Heartland to monopolize

both the primary care physician market

and the ancillary services market in

Northwest Missouri and Northeastern

Kansas, and conditions that permit

Heartland to channel or steer patients in

need of ancillary services only to

providers it owns, controls, or in which

it maintains a significant economic

interest.

Amicus strongly urges the Court to strike

the incorporated referral policy from the

terms of the proposed Final Judgment, or in

the alternative to revise the referral policy to

conform to the terms and conditions set forth

in the ‘‘Model Referral Policy’’ proposed by

amicus. In addition, amicus urges the court

to strengthen the oversight and reporting

provisions of the Compliance Program

contained in the constant decree, and to

incorporate into the consent decree

enforcement and modification procedures to

be followed in the event of violations by the

defendants of the decree.

Finally, amicus respectfully requests the

Court to allow amicus to participate in any

proceedings or hearings conducted by the

Court to determine whether the proposed

consent decree is in the public’s interest,

including oral arguments and presentation of

evidence in support of amicus curiae’s

opposition to the proposed decree.

Respectfully submitted,

ARMSTRONG, TEASDALE, SCHLAFLY &

DAVIS

Thomas M. Bradshaw, Mo. 20411

Dianne M. Hansen, Mo. 40356,

1700 City Center Square, 1100 Main Street,

Kansas City, Missouri 64105, (816) 221–3420,

(816) 221–0786 FAX

and

Glenn E. Davis, Mo. 30308

Diane E. Felix, Mo. 28439,

One Metropolitan Square, Suite 2600, St.

Louis, Missouri 63102–2704, (314) 621–5070.

Attorneys for Amicus Curiae, The Coalition

for Quality Healthcare.

Certificate of Mailing

I hereby certify that a true and correct copy

of the foregoing document was mailed,

postage prepaid, this 1st day of December

1995 to the following counsel of record:
29854 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Lawrence R. Fullerton, Esq., Edward D.

Eliasberg, Jr., Esq., Antitrust Division, U.S.

Dept. of Justice, 600 E Street, NW., Room

9420, BICN Bldg., Washington, DC 20530

Thomas D. Watkins, Esq., Watkins, Boulware,

Lucas, Miner, Murphy & Taylor, 3101

Frederick Avenue, St. Joseph, MO 64506–

0217

George E. Leonard, Esq., Shugart Thomson &

Kilroy, 12 Wyandotte Plaza, 120 West 12th

Street, Kansas City, MO 64105–0509

Brian B. Myers, Esq., Lathrop & Norquist,

2345 Grand Avenue, Suite 2600, Kansas

City, MO 64108

Richard D. Raskin, Esq., Sidley & Austin, One

First National Plaza, Chicago, IL 60603

Dianne M. Hansen

Attorneys for Amicus Curiae, The Coalition

for Quality Healthcare.

Western Illinois Home Health Care, Inc.

Gail Hursh,

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

Dear Gail Hursh: I am writing in reference

to the proposed settlement of United States

v. Health Choice of Northwest Missouri, et.

al. Case No. 95–6171–CV–SJ–6. I am writing

in reference to deep concern over the

settlement of this case that could open wider

an exclusive market to the hospital based

home care agency. They now, even with the

present statute, control the referrals out of the

hospital with intentional direction to their

hospital based home care agency. Opening

this door even wider will put them in the

drivers seat and force many independent

home care agencies out of business. It defeats

any strives to force excellent care with the

forces of competition, and puts them in

control of our health care dollar usage.

In our area, hospitals have even excluded

us from visiting previous patients that are

hospitalized. We have lost patients that had

asked for us stating in misleading terms that

I am sending your home care nurse out; to

their dismay when they arrive home they

have never met that nurse or the hospital

agency.

I had read once that there was a movement

to require hospitals to publicize a list of

discharges and where the referral was made

and to incorporate fines for misuse of their

system. I would hope we would go in that

direction in some fashion to prevent what

was not ever intended; exclusive control of

the health care system by certain providers.

I appreciate your sincere review of this

point of view and concern.

Sincerely,

Barbara Byers,

Chief Executive Officer, Western Illinois

Home Health Care Inc.

Delta County Memorial Hospital

100 Stafford Lane, P.O. Box 10100, Delta,

Colorado 81416–5003, (970) 874–7681

November 30, 1995.

Gail Kursh,

Chief Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St. N.W., Room 9300, Washington,

D.C. 20530

Ms. Kursh, I recently read the article in

‘‘Home Health Line’’ regarding the judgement

for the United States vs Health Choice of

Northwest Missouri, Inc., et al., Case No. 95–

6171–CV–SJ–6, regarding the choice of Home

Health Agencies for hospitalized patients.

The article was very informative and very

timely for our institution. We have a

hospital-based Home Health agency and in

the past year there has been several new

agencies that have moved into the area.

Generally, when our physicians order Home

Health it will be the hospital’s agency, since

they are familiar with the nursing staff, their

practices and the quality of care they

provide.

Currently, our Discharge Planners will

inform the patient the physician has ordered

Home Health and that the hospital has it’s

own agency. If the patient requests other

options for Home Health, we provide them

with a written list of the other agencies in the

area, then inform them that this will have to

be discussed and approved by the physician,

since he is the one who have to deal with a

different agency. So far, this has worked well.

We have been approached by outside

Home Health agencies requesting to sit in our

Discharge Planning Conferences, which I find

totally inappropriate. That is like having a

stranger come in off the streets and hear

about our patients, their medical condition or

home situation, a total breech of patient

confidentiality. Our hospital’s Home Health

agency does participate in our Discharge

Planning Conferences, since many of the

patients are currently their clients and any

new referrals will probably go to them.

I certainly do not agree with a rotation

system either. Discharge Planning in our

community is difficult enough without

having the added complication of keeping

track which agency is next on the list. Along

with the fact we have no first-hand

knowledge about the quality of care they

provide. Nor do I agree with allowing them

access to our patients in the hospital. These

patients are here because they are sick, they

certainly do not want or need a ‘‘Salesman’’

pounding on their door. For one thing the

patient may not even need Home Health.

Secondly, I am sure our patients do not want

four or five agency personnel knowing about

their medical condition or that they are even

in the hospital. AGAIN, WHAT HAPPENED

TO PATIENT CONFIDENTIALITY????

I think if these Home Health agencies want

to expose the public to the availability of

other Home Health Care agencies in the area,

they need to advertise like every other

business. That way patients may ask for their

particular agency if or when the need arose.

Thank you for this opportunity to express

our concerns on this matter.

Sincerely,

Ramona Frazier,

QA/Risk Manager.

Joyce Gillespie,

Marti Svensen

North Georgia Home Health Agency, Inc.

Main Office, 1875 Fant Drive, Ft. Oglethorpe,

Georgia 30742, 706/861–5940

December 1, 1995.

Gail Kursh,

Chief, Professional & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. Street, N.W., Room 9300,

Washington, D.C. 20530.

Re: Comments on Proposed Final Judgement:

United States vs. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6 in the U.S. District

Court for the Western District of Missouri

Dear Ms. Kursh: As a home health care

provider I have first-hand knowledge of the

subject matter the Department of Justice is

dealing with in the above referenced matter.

I also understand the influence a hospital can

exert in a patient’s selection of post-hospital

ancillary services, including the selection of

a home health care provider. For these

reasons, I have reviewed and studied the

DOJ’s recommended home health, DME and

hospice referral policy for Heartland

Hospital.

In the interest of protecting patient choice

(which is guaranteed by both Federal and

State laws,) as well as maintaining fair

competition consistent with the antitrust

laws and FTC regulations, I respectfully

submit that the final proposed judgement

(recommended policy) be modified as such:

• Strengthen limitations on the hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to provide patients

with an updated list of Medicare/Medicaid

providers in the community:

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers in the area;

• Require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and to

expose the patient population to the

availability of outside services as well;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

On behalf of our home health agency and

the patients we serve, we respectfully ask

that you give these comments due

consideration. These issues are of even more

concern in today’s era of health care and

provider consolidation.

Sincerely,

Sherylon Smith,

Administrator.

SS:so
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29855

Lutheran Home Care Service, Inc.

2700 Luther Drive, Chambersburg, PA

17201–8132, VOICE/TDD/TT/FAX, 717/264–

8178 and 762–3996

December 1, 1995.

Gail Kursh,

Dept. of Justice, Antitrust Division, 600 E. St.,

N.W., Room 9300, Washington, D.C.

20530

Dear Ms. Kursh, I am writing to register a

complaint regarding the proposed referral

policy for home health, DME and hospice

recommended by the Department of Justice.

We have been the primary provider of home

health and hospice within our community for

18 years. Due to philosophical differences

between our agency and the local hospitals

we did not become the hospitals home health

provider. The two small local hospitals

brought in another home care agency from

outside of our area. This provider already has

an advantage over us since they have formed

an alliance with the hospitals. Our hospitals,

have tried to be very fair in offering choices

to the patients, however, if this new referral

policy is approved then we are at a

significant disadvantage.

Lutheran Home Care Services, Inc.

supports the modifications as proposed by

the Coalition for Quality Healthcare. Those of

us who have provided faithful quality

services, as well as hundreds of thousands of

dollars in benevolent care over many years

should not be put at significant risk which

would occur if this policy were passed. We

are doing our part to try and keep our share

of the market. We should not be penalized by

a policy that clearly favors the hospital based

agencies.

Sincerely,

Diane M. Howell,

Executive Director.

November, 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

fl Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

fl Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

fl Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

fl Make the hospital publicly post its

daily referrals to both its hospital-based

entities and to other providers in the

community.

Sincerely yours,

Gaina Keljawski.

Tugaloo Home Health Agency, Inc.

P.O. Box 77, Lavonia, Georgia 30553, (706)

356–8480

December 1, 1995.

Gail Kursh,

Chief, Professional and Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. St., NW., Room 9300, Washington

DC 20530

Re: Comments on Proposed Final Judgment

United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6 in the U.S. District

Court for the Western District of Missouri

Dear Ms. Kursh: As a home health care

provider I have first-hand knowledge of the

subject matter the Department of Justice is

dealing with in the above referenced matter.

I also understand the influence a hospital can

exert in a patient’s selecting of post-hospital

ancillary services, including the selection of

a home health care provider. For these

reasons I have reviewed and studied the

DOJ’s recommended home health, DME and

hospice referral policy for Heartland

Hospital.

In the interest of protecting patient choice

(which is guaranteed by both Federal and

State laws) as well as maintaining fair

competition consistent with the antitrust

laws and FTC regulations, I respectfully

submit that the final proposed judgment

(recommended policy) be modified as such:

• Strengthen limitations on the hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to provide patients

with an updated list of Medicare/Medicaid

providers in the community;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers in the area;

• Require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and to

expose the patient population to the

availability of outside services as well;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

On behalf of our home health agency and

the patients we serve, we respectfully ask

that you give these comments due

consideration. These issues are of even more

concern in today’s era of health care and

provider consolidation.

Sincerely,

Captain C.C. Dudley,

Executive Director.

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St.,

NW., Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri, Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

fl Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

fl Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

fl Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

fl Make the hospital publicly post its

daily referrals to both its hospital-based

entities and to other providers in the

community.

Sincerely yours,

L. Patterson

November 13, 1995.

Chief Gail Kursh,

Profession & Intellectual Property Section,

Health Care Task Force, Department of

Justice, Antitrust Division, 600 E St.,

NW., Room 9300, Washington, DC 20530

Dear Chief Kursh: This letter is to provide

my comments on the proposed final

judgement for United States v. Health Choice

of Northwest Missouri, Inc. et al., Case No.

95–6171–CV–SJ–6 in the U.S. District Court

for the Western District of Missouri.

I have read the Department of Justice’s

recommended home health, DME and

hospice referral policy for Heartland Hospital

and as a home health provider I find it

continues to impede fair competition and

preserves the hospital monopoly on referrals

to home care.

My background encompasses home care

from public health to proprietary agencies. I

have witnessed hospital-based agencies take

on case overloads that prevents adequate care

being provided. A prime example is

Medicare patients requiring skilled nursing

and home health aide services. In the Omaha

area there is a severe shortage of home health

aides so the patient is advised they are

entitled to two ‘‘bath visits’’ per week. The

patient often infers this is all Medicare

allows when instead it is all that can be

staffed. The assumption cannot be made that

the agency is just being conservative with

Medicare because often the skilled nursing

and therapies are maximized when the

patient really needs more assistance with

personal care. The purchase power of

Medicare is severely decreased when one

agency provides a ‘‘bath visit’’ for one hour
29856 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

versus an agency that can provide staff to

provide a two hour visit giving more personal

care. With the lack of competition and

patients not knowledgeable of their benefits

we will continue to see our health care

dollars erode.

I do not feel this present policy goes far

enough to encourage fair competition. I

would like to see the final judgement

modified to strengthen limitations on the

hospitals ability to refer its patients to its

own health care agencies. I think the hospital

should be required to use a rotation system

which assures equal referrals to all providers

and allow the freestanding providers to visit

the hospitalized population to expose them

to the availability of outside services.

Thank you for your consideration on this

issue.

Glenelle Kruse,

208 N. Chestnut, Glenwood, Iowa 51534, 712–

527–4372.

Cabarrus County Home Health

28 Branchview Dr., NE, P.O. Box 707,

Concord, N.C. 28026–0707, Phone (704) 788–

8180, Fax (704) 788–9876

November 30, 1995.

Gail Kursh,

Chief, Professional & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, NW, Room 9300,

Washington, DC 20530

Re: Comments on Proposed Final Judgment:

United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No

95–6171–CV–SJ–6 in the U.S. District

Court for the Western District of Missouri

Dear Ms. Kursh: As a home health care

provider I have first-hand knowledge of the

subject matter the Department of Justice is

dealing with in the above referenced matter.

I also understand the influence a hospital can

exert in a patient’s selection of post-hospital

ancillary services, including the selection of

a home health care provider. For these

reasons I have reviewed and studied the

DOJ’s recommended home health, DME and

hospice referral policy for Heartland

Hospital.

In the interest of protecting patient choice

(which is guaranteed by both Federal and

State laws) as well as maintaining fair

competition consistent with the antitrust

laws and FTC regulations, I respectfully

submit that the final proposed judgment

(recommended policy) be modified as such:

* Strengthen limitations on the hospital’s

ability to refer its patients to its own hospitalbased components;

* Require the hospital to provide patients

with an updated list of Medicare/Medicaid

providers in the community;

* Require the hospital to use a rotation

system, which assures equitable referrals to

all providers in the area;

* Require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and to

expose the patient population to the

availability of outside services as well;

* Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

On behalf of our home health agency and

the patients we serve, we respectfully ask

that you give these comments due

consideration. These issues are of even more

concern in today’s era of health care and

provider consolidation.

Sincerely,

JoAnn Reed,

Director.

Emerald Care

2923 Rousseau Court, Gastonia, NC 28054,

Fax: 704–864–3673, Toll-Free Tel: 1–800–

427–1143, Telephone: 704–867–1141

December 1, 1995.

Gail Hursh,

Chief Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. Street, NW., Room 9300,

Washington, D.C. 20530

Re: United States versus Health Choice of

Northwest Missouri, et al., Case Number

95–6171–CV–SJ–6

Dear Ms. Hursh: I have received a copy of

your recommended Home Health, Durable

Medical Equipment and Hospice Referral

Policy for Heartland Hospital and I have

reservations about your recommended action.

Please consider the following:

• Hospitals now own physician practices

and in our area, our community-based

hospital owns several physician practices

and is planning to build a five-story building

for physician offices. The physicians,

therefore, are strongly encouraged to refer to

the hospitals’ home health agency. Because

of the financial-ownership relationship, this

‘‘encouragement’’ is more like a demand or

directive. This type of relationship/

requirement approaches a conflict of interest

issue.

Concerning Heartland Hospital not being

able to recommend another home health

agency:

• A community-based hospital has a

responsibility to maintain information on

pertinent resources for the education of their

staff. While no hospital can fully guarantee

or totally recommend the services of any

large home health agency, including their

own, they can and should give patients an

informed choice based upon written or

verified information from the established,

licensed and accredited home health agency,

home medical equipment company,

pharmacies, etc. Your statement implies that

since a home health agency is not part of a

hospital, i.e., Heartland, the discharge

planner cannot recommend them.

I applaud your effort in emphasizing

patient choice in the referral/selection of a

home health agency. Patients need to be

informed of the resources such as licensed/

accredited home health agencies before a

decision is made. Physicians also need the

ability to make a choice that is based on the

good of their patients and what their patients

want without possible recrimination by the

hospital, with whom the physician may have

an employee relationship.

Many patients who need home health

services are elderly and vulnerable. The idea

that these fragile persons have to ask for

choices of available ancillary services, after

being identified as needing these services, is

not fair to the client.

I thank you for the opportunity to

comment. If you have any questions please

do not hesitate to call.

Sincerely,

Eileen A. Klimkowski,

Executive Director.

Cooper Home Health, Inc.

51 North Side Square, Cooper, Texas 75432,

903–395–2811, 800–395–5357, FAX 903–

395–2766

November 30, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St., NW., Room 9300, Washington,

DC 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6

Dear Chief Kursh: As an owner/

administrator of a private home health

agency in Texas, I would like to comment on

the above referenced case and ask for

consideration for small business owners. It

appears that this case reflects the same

problems experienced by privately owned

home health agencies in competition with

hospital-based agencies. In short, hospitals

have a built-in referral base and are reluctant

to refer patients to outside home care

agencies for obvious reasons. I personally am

familiar with numerous examples in which

patients were not given a choice, and some

were even misled into thinking their

physician had made the choice for them. In

reading the proposed procedure developed

by Heartland Health System, I am convinced

that approval of this procedure will solidify

the power of hospital discharge planners to

exclude outside agencies and refer

exclusively to their own.

The proposed procedure is also in direct

conflict with the Texas Association for Home

Care Code of Ethics which states:

• Agencies shall honestly and

conscientiously cooperate in providing

information about referrals and shall work

together to assure comprehensive services to

clients and their families.

• Member agencies shall not engage in

coercive or unreasonably restrictive

exclusionary behavior which would restrict

or impede consumer choice of provider

agencies. A member agency or related entity

that provides a screen to clients for home

care referrals shall not use that position to

influence a client’s choice and to direct

referrals to itself, and shall inform clients of

the availability of home care providers and

advise clients that they have the right to

choose the provider they prefer.

The proposed procedure would allow

Heartland Health System to present

information regarding its service without any

mention of other providers. It is obvious this

procedure does not allow the patient to make
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29857

an informed choice, especially if he does not

express a preference. At a minimum, the

discharge planner should be required to

make available a listing of all providers in the

patient’s community without showing

preference to any provider.

I would sincerely appreciate your careful

consideration of this case, and hope that you

can be sympathetic to the position of

privately owned businesses. Many current

practices are already in violation of the

antitrust laws, and approval of Heartland’s

proposed procedure would give hospitals

and other health systems the ability to

restrict trade even further. Thank you for

your concern.

Respectfully,

Nicki J. Beeler,

Administrator.

At Home Health Care

900 Veterans Blvd., Suite 230, Redwood City,

California 94063, (415) 368–1182, FAX (415)

368–1184

December 2, 1995.

Ms. Gail Kursh,

Chief, Professional & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

Room 9300, 600 E. Street, N.W.,

Washington, D.C. 20530.

Dear Ms. Kursh: Below are comments on

the proposed final judgement for United

States v. Health Choice of Northwest

Missouri, Inc., et al., Case No. 95–6171–CV–

SJ–6.

Section II.B.2. and 3. of the referral policy:

De facto, the result will be no true patient

choice. Before long, no other qualified

provider will ever hear about potential

clients they could be caring for. If the

hospital is allowed to be the first and only

provider to ‘‘sell to’’ the sick and dying, the

frail elderly, and their beleaguered families,

few other providers will get referrals. This is

a fox in the hen house situation.

We say this because hospitals, being almost

universally in a strapped financial condition,

put enormous pressure on their self-owned

home care agencies. In our area, they are

nothing less than predatory. They discard the

literature we deliver to the hospital, they

cajole the doctors at hospital staff meetings,

and they disguise home care agency nurses

as hospital-employees, i.e., Discharge

Planners.

Earlier this year, we received a referral

from the ALS foundation (Lou Gehrig’s

Disease) and the patient’s family. When our

nurse went to the hospital for the discharge

planning session, the hospital’s ‘‘discharge

planner’’ was actually a nurse from the

hospital-based home care agency. In fact, she

made the comment that she didn’t quite

know how to handle the situation; she said

she’d never given a patient to another agency

before.

Usually, the ‘‘discharge planners’’ are more

discreet than this, but they invariably believe

that all hospital patients belong to them. If

they ‘‘release’’ a patient to another agency,

they believe it is a result of their largesse.

A common ploy is ‘‘I’m so sorry Mrs. Soand-so, but the paperwork is already made

out. Just try us for the first day. If it doesn’t

work out, you can change agencies

tomorrow.’’ The normal reply from a sick,

elderly person is, ‘‘I don’t want to be a bother

to anyone.’’ A frail, fatigued, 85-year old

should not be expected become an informed

consumer at the time of discharge.

Handing the patient a phone book is

completely unacceptable. The very least they

could do is provide them a ‘‘Help at Home’’

booklet or ‘‘Senior Handbook’’ published, if

not by the hospital itself, then by the county

of residence. As written, this art of the

recommended referral policy would be

insulting to the patient.

We urge the Department of Justice to make

sure that Heartland is not made the fox in the

hen house. Even more cogent, however, is the

Department’s moral obligation to insure that

American citizens, at their most vulnerable

moment, are not taken advantage of.

Sincerly yours,

Robert J. Brock,

Vice President.

cc: California Association for Health Care at

Home, Attn: Connie Little, RN

November 30, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St., NW, Room 9300, Washington,

DC 20530.

Re: U.S. v. Health Choice of N.W. Missouri,

Inc., Case No. 95–6171–CV–SJ–6

Dear Chief Kursh: As a social worker for a

private home health agency in Texas, I would

like to comment on the above mentioned case

and ask for consideration for patient rights to

informed choices. Hospitals have a built-in

referral base and are reluctant to refer

patients to home health agencies other than

their own. In reading the proposed procedure

developed by Heartland Health System, I am

convinced that approval of this procedure

will give discharge planners the power to

refer exclusively to their own agencies. The

proposed procedure is also in direct conflict

with the Texas Association for Home Care

code of Ethics. Patients must have the right

to make a informed choice of health care.

Thank you for your concern.

Respectfully,

Gregory Grinstead.

November 27, 1995.

Gail Kursh,

Chief Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St. NW

Room 9300, Washington, D.C. 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

fl Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

fl Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

fl Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

fl Make the hospital publicly post its

daily referrals to both its hospital-based

entities and to other providers in the

community.

Sincerely yours.

Margaret Klan,

4 Oakridge Drive, Marquette, MI 49855.

Richmond Healthcare Consultants, Inc.

303 South A Street, Richmond, IN 47374,

(317) 935–4677

November 30, 1995.

Gail Hursh,

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

Re: United States v. Health Choice of

Northwest Missouri, et al., Case No. 95–

6171–CV–SJ–6, United States District

Court for the Western District of

Missouri

The proposed settlement would unduly

burden non-hospital based home care

agencies.

As a President of two non-hospital owned

agencies in a 78,000 population community

with one hospital, my agencies, as well as the

other non-hospital agencies, have to scratch

and dig to PRESERVE our clients who

become hospitalized. The hospital has been

documented pressuring our patients to

change to the hospital owned agency.

We have clients who specifically request

us by name and they get the hospital based

agency in spite of their requests. They voice

dissatisfaction to their doctors who are also

under pressure by the hospital (via their

privileges) to refer only to hospital based

agency services.

We (the non-hospital based agencies) must

constantly monitor their activities to prevent

duress to our patients.

A settlement as described would in my

opinion let free the modicum of restraint the

hospital maintains now due to the existing

anti-trust regulations.

There would be no holds barred, no

competition for the hospital and I see even

now the effects of lesser quality provided by

some hospital based services becoming even

less quality oriented without strict

enforcement of anti-trust activities. The

hospital presently takes the bulk of all

discharged clients as it is.

I plead for enforcement of the anti-trust

regulations, not a lessening of them. On

behalf of my staff and clients, I thank you for

your time.
29858 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Sincerely,

Robin King,

Administrator.

RK/sf

Cooper Home Health, Inc.,

51 North Side Square, Cooper, Texas 75432,

903–395–2811, 800–395–5357, FAX 903–

395–2766.

November 30, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St., N.W., Room 9300, Washington,

D.C. 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6

Dear Chief Kursh: As an owner/DON of a

small, private home health agency in Texas,

I would like to take this opportunity to

comment on the above case. This case

reflects a growing problem for those of us in

the private industry. There is fierce

competition in the home health industry for

patient referrals on the whole. Most hospitals

now have their own home health

departments. These hospitals have a built in

referral system and are reluctant to refer

patients to competing agencies for obvious

reasons. Currently discharge planners are

required to give patients a choice when a

referral for home health is ordered by the

physician. Some discharge planners are not

giving patients a choice now due to pressures

from their administration to refer to the

hospital home health. Should the proposed

procedure be approved, there will be very

little, if any, incentive for outside referrals to

be made. This will effectively exclude private

home health agencies from receiving any

referrals from hospitals.

The main focus of those of us in the health

care industry should always be the welfare of

the patient. The patient must always be given

a choice and assisted with whatever

information he or she needs to make that

choice. This proposed process, as it is

currently written, would remove patient

welfare as a top priority and be replaced by

the desire for increased revenue/volume.

I feel that at the very least, the discharge

planners must give patients a list of home

health agencies in the area. I also feel that

patients should be assisted to make decisions

about different agencies; i.e.: agencies that

may specialize in certain areas of service.

Please consider all of the above when

making a decision about this proposed

procedure. The relationship between

hospitals and home health agencies is

strained now due to competition for patients.

The passing of this procedure would only

prove to give hospitals a greater monopoly

than they currently have further straining

relationships and shoving patient welfare to

a far, distant priority.

Thank you for your time and concern in

this matter.

Sincerely,

Tina Janes,

DON.

Tami L. Becker, R.N., B.S.N.,

14 Zanella Dr., Emmitsburg, Md. 21727

November 15, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E Street,

Northwest—Room 9300, Washington,

D.C. 20530

Dear Gail: I am writing in response to the

article published in * * * home health line,

November 13, 1995, regarding the final

judgement for United States v. Health Choice

of Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6.

First of all, I wish to express my thanks to

the Department of Justice for accepting

written comments on its proposed final

judgement in this precedent setting case.

As a supervisor for a non-profit home

health agency serving a small, but rapidly

growing rural community, I have seen

considerable changes in the delivery of home

health care over the thirteen years I have

worked for this company. Our agency has

been in business for over twenty years

providing care to the residents of our county,

and has taken pride in it’s ability to change

and grow to meet the needs of the area. We

have been proactive in stream-lining our

services to become more efficient and cost

effective, while assuring a continued high

quality of care. Despite our small size, we

have been able to negotiate with several

managed care organizations winning

contracts to provide care to the local

residents. This enables persons within our

county boundaries to continue to have a

choice between our agency and the large,

unfamiliar home health agencies located in

other counties or states.

We are well aware of the practices of many

of these for-profit home health agencies,

which contend the ability to provide services

to a large geographic area in order to win

managed care contracts; but, in reality have

no providers in many of the rural areas

which they service. Frequently, we are called

by area residents who may have had our

services in the past, complaining that their

physician prescribed nurse, therapy, or aide

services prior to their discharge from a

hospital. Once they were home, they found

that only one or two of the services were

provided in a timely manner, as the other

service(s) were unavailable due to ‘‘staffing

shortages’’. In one case, a patient who had

been hospitalized for a hip replacement

waited more than a week for therapy. In

another case, an immobilized patient never

received aide services to which he was

entitled, leaving his elderly spouse solely

responsible for his personal care needs. Both

of these patients had advised their referring

hospitals that they wished to be referred to

our agency, but were told that they had to use

the agency with which the hospital was

contracted. Quite obviously, these patients

both received less than adequate care, when

there were local agencies willing and able to

provide the service.

In most cases, it is the vulnerable elderly

population which become the victims in the

competition between home health agencies.

Even if they are mentally and physically able

to understand their rights when it comes to

choosing medical care, they are afraid to

speak up, for fear of what will happen if they

need to seek care in a particular facility in

the future. Furthermore, we are seeing an

increase in the number of patients seeking

assistance after they have been discharged

from their home health agency. The home

health agency, having exhausted the patient’s

home health insurance benefit, release the

patient, to their own capabilities. It is then

expected that we, the non-profit home health

agency, will pick up where the for-profit

agency left off and provide uncompensated

care. While we are committed to caring for

the indigent, un-insured and under-insured

of our county, it is only through the small

margin of profit reimbursement we receive

from the insured clients, that we can

continue to provide the charity care for

which we are known. As many of the

patients referred to us are non-pay or partial

pay on admission to our program, it does not

take long to exhaust our resources.

We have neither asked for, or received a

governmental subsidy to assist in the

provision of our services for over two years.

Therefore, it does not seem reasonable to

allow the for-profit agencies to discharge

patients with continuing home health needs,

after having depleted their insurance

benefits.

The referrals we receive have been won by

our continued reputation for excellence

within our community. We have no money

for marketing. Most of our referrals come by

word of mouth, either from a patient,

physician or a referral source with whom we

have worked in the past. Despite the

evolution of managed care, we continue to

subsist based upon our willingness to

streamline and cost cut. However, a form of

competition which we will not survive is the

ability of hospitals to form home health

agencies, and retain all of their paying

referrals. Our local community hospital is

now in the process of forming a home health

agency, which we have supported from the

onset. We feel that while another home

health agency in our county will most

definitely impact our referral base, it is

important that all community hospitals

augment their outpatient services to remain

viable. Never-the-less, if that hospital or any

hospital is allowed prevent patients from

learning of and utilizing other agencies, we

will have no chance for survival. This, in my

opinion, is not fair market competition but

rather the creation of a monopoly.

Thank you again for the opportunity to

express my concerns with regards to this

issue.

Sincerely,

Tami L. Becker.

Texas Association for Home Care

3737 Executive Center Drive, Suite 151,

Austin, Texas 78731, (512) 338–9293

December 1, 1995.

Gail Kursh,
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29859

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St. NW., Room 9300, Washington,

DC 20530

Re: United v. Health Choice of Northwest

Missouri, Inc. et al, Case No. 95–6171–

CV–SJ–6, District Court for the Western

District of Missouri

Dear Ms. Kursh: The Texas Association for

Home Care represents over 650 home and

community support services agencies

throughout Texas providing home health,

hospice and personal assistance services. Our

membership includes freestanding and

hospital based, as well as proprietary and

non-profit agencies. We have provided all of

our members a copy of the proposed final

judgment which outlines a policy for patient

referral by the hospital system to home care

and other ancillary services.

The paramount questions in determining

acceptability of the referral policy should be

(1) is the patient advised that he has a choice

of providers for ancillary services? (2) is

adequate information made available for the

patient to make an informed selection? The

sequence in which the information is

provided with relationship to the provisions

of information about the hospital’s ancillary

services is also a key factor in determining

acceptability of the policy.

The Texas Association for Home Care

unanimously passed a Code of Ethics in

September 1995 in order to promote the

provision of high quality home and

community support services to patients by

member agencies. Two provisions in our

Code of Ethics are relevant to this case:

• Agencies shall honestly and

conscientiously cooperate in providing

information about referrals and shall work

together to assure comprehensive services to

clients and their families.

• Member agencies shall not engage in

coercive or unreasonably restrictive

exclusionary behavior which would restrict

or impede consumer choice of provider

agencies. A member agency or related entity

that provides a screen to clients for home

care referrals shall not use that position to

influence a client’s choice to direct referral

to itself, and shall inform clients of the

availability of home care providers and

advise clients that they have the right to

choose the provider they prefer.

We will appreciate your serious

consideration of all comments that you

receive from the industries affected to protect

the patient’s freedom of choice and to

prevent unreasonable restraint of trade.

Sincerely,

Anita Bradberry,

Executive Director.

Diana L. Gustin, Attorney at Law

Plaza Tower, Suite 2001, 800 South Gay

Street, Knoxville, Tennessee 37929,

Telephone (615) 523–5545, Telecopier (615)

523–4738

November 30, 1995.

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. St., N.W., Room 9300,

Washington, D.C. 20530

Re: Written Comments on the proposed final

judgment for: United States v. Health

Choice of Northwest Missouri, Inc., et al.

Case No. 95–6171–CV–SJ–6 in the U.S.

District for the Western District of

Missouri.

Dear Ms. Kursh, I am writing in response

to the article in the newsletter of Home

Health Line on November 13, 1995, which

noted that providers are being given a chance

to comment on the proposed final judgment

for the above captioned matter. I represent

several home health care agencies, one of

which contacted me concerning this matter.

I have reviewed the proposed order with my

client and discussed the ramifications of the

changes which might result in hospital

discharge policies as a result of this

litigation. My client and I do not believe the

policy endorsed by the DOJ goes far enough

to protect independent freestanding home

health care agencies from unfair competition

by hospitals. I believe the final judgment

should be modified in accordance with the

Coalition for Quality Healthcare, the group of

St. Joseph health care providers which

proposed that the final judgment be modified

to:

—Strengthen limitations on hospital’s ability

to refer its patients to its own hospitalbased components;

—Require the hospital to use a rotation

system which assures equitable referrals to

all providers in the area;

—Require the hospital to permit

representatives of freestanding providers to

visit the hospital patients who have been

admitted for hospitalization and thereby

expose the patient population to the

availability of outside services;

—Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

In addition to endorsing the changes

suggested by the Coalition, I would like to

take this opportunity to comment on some

other concerns in regard to the DOJ’s

recommended referral policy.

First of all, I believe it is extremely

important to protect the patient’s right to be

informed and to participate in the planning

of their own care. In fact, 42 Code of Federal

Regulation Section 484.10 codifies the

patients’s right to be informed, in advance

about the care to be furnished and of any

changes in the care to be furnished. I believe

this requires more than allowing a physician

to order an Ancillary Service, specify the

provider to be used and then ask the patient

if this is acceptable. The patient should be

educated about the available choices in order

to make an informed decision. Requiring

hospitals to permit representatives of

freestanding providers to visit the hospital

patients who have been admitted for

hospitalization and thereby expose the

patient population to the availability of

outside services would accomplish this

objective. Requiring hospitals to publicly

post daily referrals to both its hospital-based

entities and to other providers in the

community would be a simple and easy way

to monitor the hospitals’ referral practices.

Secondly, the disclaimer contained in the

DOJ’s recommended home health, DME and

hospice referral policy could be quite

misleading. The social worker, who is asked

a second time, about other providers ‘‘should

indicate that Heartland has done no

independent review or evaluation of these

providers and cannot speak to the quality of

care they provide***’’

This infers that other agencies’ quality of

care is not equal to (or better than) the

hospital’s quality of care. This suggestion

may be used to frighten the patient into

choosing the hospital affiliated agency. Since

quality assurance and condition of

participation surveys are performed on a

regular basis upon all home health care

agencies which participate in the Medicare

program, it should be presumed that those

agencies which have maintain their license

in good standing have the level of quality

care necessary. In short, quality controls exist

for freestanding agencies which are not being

mentioned to the patient yet the suggestion

is being made that providers, other than the

hospital affiliated provider, could be lacking

in quality in comparison thereto. This type

of misleading disclaimer could be construed

as unfair competition.

Finally, the application of the prohibition

on self-referral should be considered in this

context. 42 U.S.C. Section 1320a–7b states

that whoever knowingly and willfully solicits

or receives any remuneration directly or

indirectly, overtly or covertly, in cash or in

kind, in return for referring an individual to

a person for the furnishing or arranging for

the furnishing of any items or service for

which payment may be made in whole or in

part under Title XVIII or a State health care

program, shall be guilty of a felony and upon

conviction thereof, shall be fined not more

than $25,000 or imprisoned for not more than

five years, or both. This section of the

Medicare Act could be read to find that

payment of wages to the hospital social

worker or discharge planner or referring

physician would qualify as acceptance of

remuneration for referral to the hospital

affiliated provider. In fact, the very abuse this

statute seeks to prohibit could occur if

hospitals are continually allowed to

automatically refer all ancillary services to

their own affiliated providers. There is an

incentive for overutilization being

perpetuated by allowing a hospital to

automatically refer to itself.

Based upon all of these points, I strongly

suggest consideration of language which

would provide additional safeguards in the

referral policy at issue in this litigation.

Thank you for the opportunity to provide

comments on this subject. If you have any

questions concerning this letter, please feel

free to contact my office.
29860 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

Sincerely,

Diana L. Gustin.

Villa-Care Home Health, Professional Home

Health Services

1100 Bridgewood Dr., Suite 110, Fort Worth,

Texas 76112, (817) 451–3654, Metro (817)

429–9229, Fax (817) 451–3806

November 30, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, NW., Room 9300,

Washington, DC 20530.

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

195–6171–CV–SJ–6, U.S. District Court

for the West District of Missouri.

Dear Ms. Kursh: As a home health

provider, the proposed final judgment for

above referenced case creates serious

questions for us. From the provisions I have

read, it seems that this proposal from

Heartland Health System would continue to

allow Heartland to refer to their own

ancillary services with few exceptions. This

could, and probably would, have a negative

impact on private, free-standing ancillary

services of all kinds.

Texas Association for Home Care embraces

a code of ethics that includes cooperation

between agencies in providing information

about referrals and the provision of

comprehensive services to clients and their

families. Also included in this code is that

member agencies will not engage in coercive

or unreasonably restrictive exclusionary

behavior which would restrict or impede

consumer choice of provider agencies. The

proposed final judgment would be

unreasonably restrictive, exclusionary,

coercive, and as a result, detrimental to any

agency not attached to a hospital or other

large health care system.

‘‘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’’ is not allowing the patient the right

to choose. The patient remains uninformed

about options in the community, unless by

some chance s/he has more knowledge than

the average patient about resources available.

It is the obligation, duty and responsibility

of free-standing ancillary services to provide

information to the healthcare system

regarding their qualifications which may

include Medicare certification, JCAHO

accreditation, etc. It should also be the

obligation, duty and responsibility of the

healthcare system to make that information

available to all patients. In light of the

changes being proposed in the Medicare

payment method to home health agencies, it

is the fear of many of the free-standing

agencies that the healthcare systems will take

only those patients felt to be ‘‘cost effective,’’

and all others will be referred out.

Too many times the elderly population is

neglected or abused by healthcare providers.

To pass this final judgment would be another

opportunity for huge healthcare systems to

benefit financially from the unsuspecting

public.

I appreciate this opportunity to express my

feelings regarding this issue and hope that

the final judgment will be more favorable to

the patient and the independent ancillary

service providers.

Sincerely,

Meredith H. Tracy,

Director of Nursing.

Total Professional Health Care, A Subsidiary

of NuMED Home Health Care, Inc.

5770 Roosevelt Blvd., Suite 700, Clearwater,

FL 34620, (813) 531–0299, (813) 530–4912

Fax

November 30, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street N.W., Room 3900,

Washington, D.C. 20530.

Dear Ms. Kursh. This is in response to an

article written in the Home Health Line

regarding the proposed Department of

Justice’s final judgement for the United States

versus Health Choice of Northwest Missouri

Inc., et al, case number 956171–cv–sj–6.

As a home health provider, Total

Professional Health Care has three major

areas of concern. Although the prepared

judgement appears to give the beneficiary the

right to choose his or her provider, we fear

that the method in which the alternatives are

presented still favor the hospital based

affiliated provider. Please refer to B#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.’’ Based upon this reference, we would

like to pose a question; If you were the

beneficiary, who would you choose? The

unknowing guest of the hospital could be

swayed into believing that the hospital based

affiliates are the ‘‘only’’ choice.

The second area of concern is the issue of

quality care. Since it appears that there will

a minimum amount of competitiveness

among the ancillary services, who will

ensure that the best care is provided? Can

you ensure the beneficiary that his or her

‘‘choice’’ of providers is the correct one? Who

is willing to take responsibility for inferior

care should the situation arise?

Lastly, a member of the free standing

provider community, our business will be

dramatically affected by this proposed final

judgement. We have already experienced

difficulty accessing patient’s charts. Several

of the physicians who who have ordered our

home health services for their patients in the

past have yielded to internal pressures from

within the hospitals to order hospital based

home health agencies.

We have been providing quality care to our

community since 1976 and have earned an

excellent reputation. We consider the

opportunities afforded to the hospital based

ancillary services to be grossly unfair. We

hope that you will consider these facts when

making your final decision.

Thank you for allowing us to comment on

this very important matter. Should you have

any questions, please do not hesitate to

contact me at (813) 531–0299.

Sincerely,

Margaret VanDeMar,

Regional Director.

cc: Susan Carmichael, President, NuMED

Home Health Care

Idaho Home Health, Inc.

1910 Channing Way, Idaho Falls ID 83404,

(208) 528–2877, (800) 464–2877, fax (208)

529–529–5867

December 3, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St., N.W., Room 9300, Washington,

D.C. 20530

Dear Ms. Kursh: The proposed settlement

between the DOJ and Heartland Health

System Inc., undermines the free enterprise

system and sentences the small, communitybased entrepreneur to the assembly line. A

more equitable approach to the problem

would be:

1. Strengthen limitations on the hospital’s

ability to refer its patients to its own hospitalbased components;

2. Require the hospital to use a rotation

system, which assures equitable referrals to

all Providers in the area;

3. Require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who have

been admitted for hospitalization; and to

expose the patient population to the

availability of outside services as well;

4. Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Incorporating the above recommendations

into the DOJ settlement would go a long way

toward resolving the inequities that have

existed between hospitals and communitybased entities.

Thank you,

Frank Dalley,

President.

November 27, 1995

Gail Hursh,

Chief Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. Street, NW., Room 9300,

Washington, D.C. 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29861

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours.

Sharon Fries.

November 27, 1995

Gail Hursh,

Chief Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. Street, NW., Room 9300,

Washington, D.C. 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours.

Lou Ann Balding.

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Diane Gadomski

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Darrel Benneto

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual, Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Jayne E. Majors

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual, Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Irma Powers

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling the matter of United States

v. Health Choice of Northwest Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.
29862 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

MaryAnn Perry

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling the matter of United States

v. Health Choice of Northwest Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Sherri Rule

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. Street,

N.W., Room 9300, Washington, D.C.

20530.

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decisions to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

• FAIR competition requests in better, fair

priced care for our patients.

Sincerely yours,

Joan Risk,

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. Street,

N.W., Room 9300, Washington, D.C.

20530.

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decisions to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Emma Jean Fowler

November 27, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. St.,

NW., Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri, Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Brenda Phillips

November 27, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. St.,

NW., Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri, Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Stephanie Paderson,

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. St.,

NW., Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29863

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours.

Stephanie Wickstrom

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. St.,

NW., Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Deanna LaBelle

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW,

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v Health Choice of Northwest Missouri

Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Susan Hakola

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW,

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v Health Choice of Northwest Missouri

Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Donna Carlson Albire

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri, Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Rene Dawe

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust

Division, 600 E St., NW, Room 9300,

Washington, D.C. 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United

States v. Health Choice of Northwest

Missouri, Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely yours,

Marybeth Coyne,

Occupational Therapist.

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual, Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St., NW

Room 9300, Washington, DC 20530

Dear Ms. Kursh: I am an employee in a

small, rural freestanding home health care

agency. I have read with great dismay the

recent DOJ ruling in the matter of United
29864 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

States v. Health Choice of Northwest

Missouri, Inc.

In our own community, a local hospitalbased program has instituted unfair practices

which have practically eliminated

competition in our service area.

I know that in our government, numbers

count. Let me add my voice to the many who

will ask you to modify the decision to

include the following language:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system, which assures equitable referrals to

all providers who offer the same level of

certification and/or accreditation, or higher

in the area—Hospitals are well aware of the

accreditation of local providers;

• Require the hospital to permit (on their

premises, during normal working hours),

representatives of freestanding providers;

• Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

Sincerely,

Chris Renland

District Health Department No. 4

Alpena County, 1521 W. Chisholm St.,

Alpena, MI 49707, (517) 356–4507, Fax (517)

356–9080

November 29, 1995.

Gail Kursh,

Chief, Professional and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Anti-Trust

Division, 600 E Street, NW, Room 9300,

Washington, DC 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc. et al., Case No.

95–6171–CV–SJ–6

Dear Ms. Kursh: It is with great concern

that I read of the Department of Justice’s

proposed final judgement concerning the

above case. As the proposed judgement

currently reads, home health care programs

which are not affiliated with hospitals are

put at a severe disadvantage, because they

will not have access to patients in a

hospital’s system.

The precedence this rule sets will not only

be a blow to independent home health

agencies, such as ours, but also to patients.

At the time when patients are most in need

of knowing their available options, they are

least able to explore them. Safeguards must

be in place to assure that patients are made

aware of options available to them at the time

of discharge. Only when knowing the options

will a patient be able to make an informed

choice.

Please let this letter serve as a request that

the final judgement be modified to:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospital

based components;

• Require the hospital to use a rotation

system which assures equitable referrals to

all providers in the area; and

• Require the hospital to unbiasly inform

a patient of his or her options when

establishing their discharge plan.

Choice can only be choice when one

knows what their alternatives are. Only by

making such modifications will we ensure a

patient’s choice is protected.

Sincerely,

Christopher J. Benedict,

Health Educator.

District Health Department No. 4

Alpena County, 1521 W. Chisholm St.,

Alpena, MI 49707, (517) 356–4507, Fax (517)

356–9080

November 29, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, NW., Room 9300,

Washington, DC 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6

Dear Ms. Kursh: It is with great concern

that I read of the Department of Justice’s

proposed final judgment concerning the

above case. As the proposed judgment

currently reads, home health care programs

which are not affiliated with hospitals are

put at a severe disadvantage, because they

will not have access to patients in a

hospital’s system.

The precedence this ruling sets will not

only be a blow to independent home health

agencies, such as ours, but also to patients.

At the time when patients are most in need

of knowing their available options, they are

least able to explore them. Safeguards must

be in place to assure that patients are made

aware of options available to them at the time

of discharge. Only when knowing the options

will a patient be able to make an informed

choice.

Please let this letter serve as a request that

the final judgment be modified to:

• Strengthen limitations on a hospital’s

ability to refer its patients to its own hospitalbased components;

• Require the hospital to use a rotation

system which assures equitable referrals to

all providers in the area; and

• Require the hospital to unbiasly inform

a patient of his or her options when

establishing their discharge plan.

Choice can only be choice when one

knows what their alternatives are. Only by

making such modifications will we ensure a

patient’s choice is protected.

Sincerely,

Kathy Orban,

Home Care Nursing Director.

Harbors Home Health and Hospice

201 7th Street, Hoquiam, WA 98550, (360)

532–5454

December 1, 1995.

Gail Kursh,

Chief, Professional & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 ‘‘E’’ Street, N.W., Room 9300,

Washington, D.C. 20530

Re: Comments of proposed final judgement

for United States vs. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6, U.S. District Court

I believe the policy as written does not

adequately protect patient choice and fair

competition.

I feel the hospital should be required to

provide a quarterly updated list from the

surveyors of Medicare and Medicaid certified

providers to patients who were not receiving

service from a Home Health Agency at time

of hospital admission and do not have a

preference of home care providers.

Additionally, the referring entity should not

be able to steer or influence patients toward

their own provider entity. Hospitals should

be prohibited from steering patients away

from an established relationship with a free

standing agency.

I have experienced in practice, patients

who were open to a free standing agency on

admission to the hospital and notice was

given to the social service department of the

established relationship. The patients were

referred and opened to the facility based

agency upon discharge. When queried,

neither the patient or family made the choice

to change and in some cases insisted they be

referred back to their original agency so they

might continue with the same caregivers.

Other patients and families said they would

stay with the hospital based to avoid bother

and to be sure they could again be admitted

to the facility. In other cases, the frail elderly

suffered from confusion or just did what

‘‘they’’ recommended.

Frail elderly suffering from chronic

illnesses deserve to be protected when their

defenses are compromised.

Please see that the final judgement assures

patient choice and fair competition protected

by Medicare (42 USC § 1395a) and Medicaid

(42 USC § 1396a(23).

Thank you for your consideration of these

comments.

Sincerely,

DeLila Thorp,

Administrator.

Faith Community Hospital

171 Magnolia St., Jacksboro, Texas 76458,

817–567–6633, FAX 817–567–5714

November 27, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. Of

Justice, Antitrust Division, 600 E St., NW,

Room 9300, Washington, DC 20530

I would like to take this opportunity to

comment on the United States v. Health

Choice of Northwest Missouri, Inc., et al.,

Case No. 95–6171–CV–SJ–6.

It is a fact that fraud is running ramped in

home health and DME services in the health

field. With the implementation of the Stark

I and Stark II amendment, some of the fraud

activity by hospitals and physicians has been

curtailed.

I have no knowledge of case no. 95–6171–

CV–SJ–6, however, I would like to respond

to one of the provisions as set forth:

• If a physician orders an Ancillary

Service and specifies the provider to be used

(whether specifically written in the chart or

other written notifications), then a referring

person shall contact the patient indicating

that the physician has ordered an Ancillary

Service and has ordered that a particular
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29865

provider be used. The patient should be

asked if this is acceptable, and if so, referred

to that provider.

This section is where I have a problem due

to the possibility that a physician who may

have a vendetta against a hospital based

home health service can willfully, without

any repercussion, direct all patients away

from that service.

The physician should not be allowed to

order a patient to use a particular home

health service. This should be solely the

patients choice.

This judgement, if approved, can and

probably will set a standard for other hospital

systems. When you have only 2 or 3

physicians on medical staff and a physician

becomes disgruntled with any faction of the

hospital, dependent upon his client base, he

could severely threaten the viability of the

hospital.

So, with this in mind, I ask that you please

reconsider the terminology used, whereby

the physician can specify the provider.

Sincerely,

Ronald G. Ammons,

Administrator.

R.D. #3 Box 284, Meadville Pa. 16335

December 1, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St.,

NW., Room 9300, Washington, DC 20530

Dear Gail Kursh: Regarding the article in

Home Health Line, 11–13–1995, Vol. XX, No.

43, and the Dept. of Justice recommended

home care referral policy for Heartland

Hospital System Inc.

I am very concerned that Americans are

losing their freedom of choice. I currently

work for a home health company that is not

locally hospital based. I have found citizens

in our community, to a large extent, are

unaware there is any choice and assume each

company is one and the same. In the past I

worked for the local hospital based program

and when competition arrived positive

changes occurred. I am aware of some

changes that occurred prior to and since I left

their employment. Competition has benefited

our community. Example. Referred patients

requiring home health care are now seen

within 24°, unless the patient requests

otherwise. Previously patients often were

scheduled per office convenience with

several day delays.

• Ordered therapy/treatment (which can

safely be completed in the home) are more

rapidly available (staff educated to complete)

when the treatment is available from

competition.

• Local low pay scale for home care nurses

has been brought in line with surrounding

communities.

• I realize that hospitals are concerned

about their fiscal responsibility and home

care is economically positive for the hospital

but are there assurances that optimal care

will be provided safely and efficiently to our

society. I feel a monopoly may lead to a

decline in services provided to the client/

patient in home care. I agree with the

‘‘Coalition for Quality Healthcare’’ proposal

. . . modifications are necessary to ensure

optimal health care to our society. Freedom

of choice should prevail. Patients and

physicians will have freedom to change if

dissatisfied with a current provider. I feel

competition helps to ensure the best home

care skilled services to our neighbors,

friends, and loved ones.

Sincerely yours,

Sharon Ferguson

Memorial Medical Center of East Texas

P.O. Box 1447, Lufkin, Texas 75901 (409)

634–8111

November 29, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street, NW, Room 930,

Washington, DC 20530

Dear Ms. Kursh, Memorial Medical Center

of East Texas is a private, non-profit hospital

system which also includes a skilled nursing

facility, rehab facility, inpatient physiatric

facility and home health care. In our

community, population 40,000, there are

eleven free-standing home health care

agencies and two hospital based. The

marketing efforts by the hospital based

agencies are limited to access through the

hospital medical staff system and educational

programs for hospital staff such as social

workers and utilization review nurses.

It poses an ethical dilemma for the hospital

‘‘discharge planning’’ staff members to give

information or a list of other agencies for

several reasons. We have no way to reliably

ascertain the quality of care given by these

agencies. Often we have patients who are

admitted after being a patient of another

home health agency and we have questions

about the care that was rendered. For our

hospital to give brochures or provide a list

would constitute, in the eyes of the

consumers, the endorsements of these

agencies. This causes grave concern from the

hospital risk management department. It

would be impossible to keep a current list

since agencies routinely open, close, change

locations and change staff. To require the

hospital to keep up with all of this is an

unnecessary administrative burden.

In no other hospital practice are we

required to advocate for our competition. If

a patient comes in for outpatient lab or

mammography we are not required to give

them a listing of all other free-standing labs

or mammography centers in our region. It has

always been an enigma to me that the home

health agencies were singled out for this

constraint. Therefore, I wish to voice my

support of the procedure developed by

Heartland Health Systems and currently

under consideration in the United States v.

Health Choice of Northwest Missouri, Inc., et

al., case no 95–6171–CV–SJ–6 currently in

the United States District Courts for the

Western District of Missouri.

Should you have any questions or need

further input, I am available to you at 800–

944–0825.

Thank you very much.

Patricia R. Jones,

Administrative Director, Memorial Medical

Center HomeCare.

Supportive Care Services—Hospice Brazos

Valley

2729 A East 29th Street, Bryan, TX 77802,

Phone #: (409) 776–0793, 1–800–824–2326,

Fax #: (409) 774–0041

November 29, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E St., NW, Room 9300, Washington,

DC 20530

Dear Ms. Kursh: I am writing to you in

response to a Texas Association for Home

Care Fax Alert. This Alert was dated

November 24, 1995. It was regarding the

Dept. of Justice proposed final judgment for

United States v. Health Choice of Northwest

Missouri, Inc., et al.

My concerns emanate about the scenario

of:

• If a physician orders an Ancillary

Service, but does not specify the provider to

use, then the patient shall be 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.

• 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.

It is this second paragraph that is of great

concern to me as both a consumer and a

provider. As a consumer, unless I have the

advantage of full knowledge, how am I to

have the ability to make an informed choice.

By Heartland being allowed to present

themselves without necessarily disclosing

information regarding other possible Home

Health or Hospice choices, my beliefs are

there is a possibility of manipulation of

consumer by Heartland or any other hospital

with this advantage.

In Texas, TAHC Code of Ethics provisions

appear to be more stringent than the

proposed DOJ referral policy, thus protecting

the consumer’s right of informed choice. The

point of significance is that the client must

be provided information, regarding all

options of home care service providers, not

just hospital’s (in which the client is

receiving services) home care agency. For a

client that had no previous knowledge about

home care provider services, it would not be

possible for him to make a fully informed

decision of choice.

I greatly encourage to reconsider the DOJ’s

stance and final judgement for United States

v. Health Choice of Northwest Missouri, Inc.,

et al. For the publics protection and to

guarantee their right to full informed

decision of choice, it would appear beneficial

that the judgement follow the guideline of

the TAHC Code of Ethics provisions

regarding this situation.

If I may be of further assistance to you

regarding this issue or if I may provide
29866 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

further information, please do not hesitate to

contact me. Thank you for your time and

consideration.

Sincerely yours,

Timothy M. Brown

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force, Dept. of

Justice Antitrust Division, 600 E St., NW.,

Room 9300, Washington, DC 20530

To Whom It May Concern: This is in

response to the Dept. of Justice proposed

judgment for United States v. Health Choice

of Antitrust Missouri, Inc. Case #95–6171–

CV–SJ–6.

As a health care provider (RN) and

consumer, it appalls me to know that

hospitals may not be required to inform

patients about alternatives in the health care

market. Because a hospital informs a client

of any available home health agencies does

not mean the hospital endorses such

agencies. Healthy competition is good for the

consumer and serves as a check and balance

system. Hospital based agencies would

usually monopolize the market if this referral

policy is permitted and quality care will be

compromised.

Also, economically, competition allows the

consumer to get the most service for their

money. Please do not permit this to change.

Sincerely,

Barbara L. Lenecea

Marblehead Visiting Nurse Association, Inc.

Widger Road Medical Building, Marblehead,

MA 01945–2146, Phone (617) 631–1900, FAX

(617) 631–7944

November 20, 1995.

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force, Dept. of

Justice Antitrust Division, 600 E Street,

NW., Room 9300, Washington, DC 20530

Dear Ms. Kursh: As the CEO of a visiting

nurse agency which receives approximately

35% of its referrals from a hospital that has

its own home health agency, I can truly speak

to the referral policy issue.

At present, the patients being discharged

from this hospital are frequently not only not

given any choice for a provider of home

health services he/she may require, but are

refused the opportunity to utilize the services

of an agency for whom they voice a

preference.

Today, patients in need of care are allowed

fewer and fewer choices. It is my belief that

patients should not only be asked if they

have a preference, but be given the

opportunity to verbalize their choice of

provider in their service area. Further, it

seems logical for representatives of various

home health agencies to be physically

present in the hospitals, so that the home

health plan of care may be established and

followed up on in a timely fashion, thus

making for a smoother transition for the

patient and patient’s family.

An equitable referral system is essential to

ensure the patient has the freedom of choice

and is given every opportunity to exercise

his/her right of choice. This is one means by

which the hospital may be held accountable

for providing the patient’s rights.

It is may hope and the hope of my staff,

that the Department of Justice will consider

these factors and support the Health Care

Fairness Act of 1995 (H.R. 2400).

Sincerely,

Joyce L. Elliott

December 4, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property,

Section/Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E St.,

NW., Room 9300, Washington, DC

20530.

Dear Mrs. Kursh: It greatly distresses me

that there would be even slight consideration

given to allowing hospital discharge planners

the ability, by law, not to give patients

choices available to them for home care.

Free standing agencies are not asking for

recommendations from discharge planners in

terms of the quality work we do. We feel that

our work speaks for itself. We do however,

expect for patients to be made aware that we

exist.

This situation is the closest thing I have

ever witnessed of the government actually

participating in setting up a monopoly. What

has happened to fair competition and patient

choice?

Respectfully,

Susan Livvix

Memorial Hospital of Taylor County and

Memorial Nursing Home

Eugene W. Arnett, President, Medford,

Wisconsin 54451, Telephone: 715–748–8100,

Fax: 715–748–8199

December 4, 1995.

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice—Antitrust

Division, 600 E Street, NW., Room 9300,

Washington, DC 20530.

Dear Ms. Kursh: I am in support of the

Department of Justice recommended home

health, DME, and hospice referral policy as

outlined for Heartland Hospital in St. Joseph,

Missouri.

Hospitals have internal mechanisms that

provide for independent review or evaluation

of the services offered. Offering names of

other providers during discharge planning

could infer the hospital is endorsing that

agency.

I also support patient choice; but if the

patient has no preference and asks the

hospital for guidance, the hospital has an

obligation to help that patient.

Recommending their own services should

not be misconstrued as a monopoly tactic.

Please consider these remarks when

making a final judgment for United States.

Sincerely,

Carol A. Ahles,

Vice President—Administration.

Polyclinic Medical CenterTM

December 8, 1995.

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, NW., Room 93, Washington,

D.C. 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6.

Dear Ms. Kursh: I am responding to the

proposed settlement between the DOJ and

Heartland Health System Inc., St. Joseph, Mo.

As the medical director for a large hospitalbased home health care and hospice agency,

I am very much in favor of the DOJ’s

recommended home health, DME and

hospice referral policy for Heartland

Hospital.

As we all know, patients are being sent

home from hospitals ‘‘quicker and sicker.’’

Home health care and hospice care under the

auspices of a hospital becomes the legal

responsibility of the hospital. Our agencies

are Medicare and Joint Commission certified.

Quality of care and issues such a patient

outcomes, patient satisfaction, etc. are

studied by our hospital Quality Assessment

Department, Administration, Professional

Activities Committee on the Board of

Directors, and the Board of Directors of the

hospital. Hospital discharge planners are in

an excellent position to know the

qualifications of its own departments, but are

not in a position to know the qualifications

of other area providers.

The recommended policy is a good one

and should become permanent.

Respectfully yours,

James F. Crispen,

Medical Director, Professional Home Health

Care Agency & Professional Hospice Care (A

Subsidiary of the Polyclinic Medical Center,

Harrisburg, Pa).

Reavis Health Systems

1980 South Austin Avenue, Georgetown, TX

78626, (512)930–5877, Fax (512) 863–6506

December 1, 1995.

Ms. Gail Kursh,

Chief of Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street NW #9300, Washington,

DC 20530.

Dear Ms. Kursh: I want to applaud your

judgment in the case of United States v.

Health Choice of Northwest Missouri, Inc. I

thoroughly believe it is imperative that the

patient retain the utmost privilege and right

of making the choice of a health care

provider themselves. It is such a relief to

finally have a precedent that sets that stage

for higher ethical standards.

It has been my experience that when a

health care facility is faced with stiff

competition, patients rights are sometimes

abused. I feel it is necessary for strict

regulations in regard to Hospital-based health

facilities and their disbursement of referrals.

It is unfortunate the rights of individuals are

most frequently abused in the interest of the

larger institutions, and the patient so often is

not even aware.

I want all patients to be provided with

information notifying them they have a
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29867

choice in home health agencies. Hospitals

should be required to provide the patient

with a list of all prospective agencies. I

would also like to see a provision that allows

all home health agencies to leave educational

materials. I do not feel this would make

hospitals liable for the care rendered by the

respective agencies.

It is time to stop the abuse and provide us

all with equal and fair legislation.

Sincerely,

Nancy Reavis,

CEO, Reavis Health Systems, Inc.

MedCare Systems, Inc.

Grand Rapids 616.452.5700 • FAX

616.452.8822, Lansing 517.394.4435 • FAX

517.394.4439

December 6, 1995.

Ms. Gail Kursh,

Chief, Professional and Intellectual Property/

Section, Health Care Task Force, Dept. of

Justice, Antitrust Division, 600 E. St.,

NW., Room 9300, Washington, D.C.

20530

Dear Ms. Kursh: I am writing in response

to the article in Home Health Line of

November 13, 1995. I am concerned as an

administrator of a Medicare/Medicaid

certified home care agency that the health

care industry is not only being allowed but

pushed to form mega-systems that violate

antitrust values.

In the Grand Rapids area of Michigan

where our corporate office is located, we

have a hospital merger pending that will

monopolize health care in this area, and

effectually eliminate the balance of cost

control and quality management that

competition provides.

We are already seeing this in the home care

industry. Because the hospitals have their

own home care components, they direct the

vast majority of discharges for home care to

their own agencies. The protection of patient

choice is not effective because the Medicare

population is elderly and sometimes

forgetful. They need objective support to

make educated free choice. Even physicians

who could educate their patients regarding

special services through outside agencies are

intimidated into using a hospital service that

may not best meet the patient’s needs.

The agency I work for has focused on

developing services not previously available

in the community. We hire critical care

nurses for our cardiovascular program and

provide in home telemetry. We have been

told by many in the community that our

services are the ones they would like to use

but they cannot because their hospital

administration directs them to use the

hospital’s program.

We need change, and control over provider

driven referrals and care. Why are we putting

the control in the financial hands of the

biggest provider system in our country, the

hospital, that has demonstrated for decades

that it does not know how to control cost but

instead shifts cost. Hospital based home care

agencies are being used for cost shifting.

Small independent health care businesses

need to be fostered in the managed care

environment so that the true benefits of

competition, cost control and quality, will be

realized. We need to educate consumers and

allow choice in health care.

Mega-monopoly providers who direct

business to their own bottom line are not the

answer.

We need to:

• Stop provide driven referral. We are

shifting from physician provider driven to

mega hospital provider driven.

• Require to rotate referrals for general

med/surg cases. This will help educate the

public and stimulate competition to the good

of patients.

• Require hospitals to allow free standing

home care agencies the freedom to visit their

patients in the hospital.

• Require the hospital during the discharge

planning process to provide patients a list of

agencies that provide home care.

• Require mandatory education of hospital

discharge planners regarding services

available in the community that address

specific, special patient needs.

• Allow the educated professional

discharge planners to use their own

professional, clinical judgement when

counseling patients choosing an agency

rather than direct to their hospital agency

simply because they have been directed to do

so.

• Prevent hospital administration from

intimidating discharge planners or

physicians into making self referrals to their

own agency regardless of patient need. The

doctor or discharge planner may know

another agency that is better qualified to meet

the specific patient’s needs.

• Provide incentives for creative health

care professionals to decrease cost while

enhancing quality.

Sincerely,

Carol E. Veenstra

December 6, 1995.

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. St., Room 9300, Washington, DC

20530

Dear Ms. Kursh: I am writing in regards to

the case United States v. Health Choice of

Northwest Missouri, Inc. I am a MSW, LCSW

Clinical Social Worker with 20 years

experience in health care settings. I would

like to comment on this case from the

standpoint of patient self-determination, ie

choice, and efficiency/cost effectiveness.

First, the proposed changes from the

Coalition for Quality Healthcare are

unreasonable and place undue burden on the

discharge planner to ‘’take care of the

vendor,’’ not the patient. Documentation of

referrals, daily posting of referrals, rotation

system, etc is extra work which does not

enhance the care of patients. Also, patient

confidentiality precludes having vendor

representatives roam the halls looking for

clients.

Secondly, the Heartland approach which

suggests that a patient should ask TWICE for

the names of non-hospital affiliated vendors

is disrespectful, time consuming,

manipulative and an undue hardship in the

patient.

Why can’t reason dominate in this ruling?

The hospital discharge planners can first

discuss the hospital based home care

program, then if the patient requests other

vendor names/info, the discharge planner

can share that info with the patient at that

moment.

Obviously this case is between vendors

and hospitals. Where is the patient in this

and who is looking out for their needs/rights?

Thank you for the opportunity to express

my comments.

Sincerely,

Brenda Wilson,

Lead Social Worker.

Central Hospice Care

1150 Hammond Drive, Suite B–2100, Atlanta,

GA 30328, (770) 391–9531, Fax (770) 391–

9732, (800) 581–8000

November 29, 1995.

Gail Kursh,

Chief, Professional & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, N.W., Room 9300,

Washington, D.C. 20530

Re: Comments on Proposed Final Judgement:

United States v. Health Choice of

Northwest Missouri, Inc., et al., Case No.

95–6171–CV–SJ–6 in the U.S. District

Court for the Western District Court for

the Western District of Missouri

Dear Ms. Kursh: As a Hospice provider I

have first-hand knowledge of the subject

matter the Department of Justice is dealing

with in the above referenced matter. I also

understand the influence a hospital can exert

in a patient’s selection of post-hospital

ancillary services, including the selection of

a hospice care provider. For these reasons I

have reviewed and studied the DOJ’s

recommended home health, DME and

hospice referral policy for Heartland

Hospital.

In the interest of protecting patient choice

(which is guaranteed by both Federal and

State laws) as well as maintaining fair

competition consistent with the antitrust

laws and FTC regulations, I respectfully

submit that the final proposed judgement

(recommended policy) be modified as such:

—Strengthen limitations on the hospital’s

ability to refer its patients to its own

hospital-based components;

—Require the hospital to provide patients

with an updated list of Medicare/Medicaid

providers in the community;

—Require the hospital to use a rotation

system, which assures equitable referrals to

all providers in the area;

—Require the hospital to permit (on their

premises, during normal working hours)

representatives of freestanding providers—

other than their own hospital-based

components—to visit their patients who

have been admitted for hospitalization; and

to expose the patient population to the

availability of outside services as well;

—Make the hospital publicly post its daily

referrals to both its hospital-based entities

and to other providers in the community.

On behalf of our Hospice agency and the

patients we serve, we respectfully ask that
29868 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

you give these comments due consideration.

These issues are of even more concern in

today’s era of health care and provider

consolidation.

Sincerely,

Margot Marcus,

Manager, Central Hospice Care, 1150

Hammond Drive, Suite B–2100, Atlanta, GA

30328.

Heritage Home Health Inc.

December 4, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. St. N.W., Room 9300, Washington,

D.C. 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc. et al., Case No.

95–6171–CV–SJ–6

Dear Gail Kursh: After reading about the

case of Heartland Health System Inc. in the

Home Health System Line, we would like to

respond to you with our concerns as we are

in a very similar situation and we would like

to request any information, decisions or

assistance you can provide us.

We are Heritage Home Health Care, a

proprietary freestanding Home Health

Agency, and we have 5 branches. The agency

is a small corporation owned and operated by

myself and my mother.

We opened two branches eight months ago

in counties that have a hospital based HHA

and to date we have received zero referrals.

In our other counties, we had received at

least 80 to 100 from the hospital by this time.

Montana is a CON state and it has established

guidelines that allow two HHA in each

county so there is the capability for choice.

In the two counties with hospital based HHA,

there are only two Home Health Agencies,

ours and the Hospital based.

Enclosed is some of our correspondence in

our efforts to try and promote patient choice

or any kind of mechanism to minimize their

weighting the individuals decision of a HHA.

Presently the hospitals allow the hospital

based HHA have an individual review the

charts on a daily basis for any patient that

would be in need of home health services.

We are not allowed the same privilege

because of patient confidentiality as our staff

are not employees of the hospital. When the

hospital Home Health personnel locates a

possible referral, they call the Doctor and

inform him that they can provide Home

Health Services and get the physicians order.

Another concern is that the doctors depend

on hospitals for many things, including the

privilege of doing surgery, perhaps office

space etc. Because a large amount of their

revenue comes from their functions at the

hospital, some doctors are not going to

recommend any other home health agency if

the hospital has one. If the doctors did

recommend another home health agency,

they could loose some of their privileges. The

same goes for the patient. The patients will

not go against the doctor’s and/or hospital’s

wishes for fear of reprisal. This is especially

true when there is only one doctor in town.

That doctor could refuse to treat the patient

and the patient would have to go out of town

for treatment. This has actually happened in

several instances.

Under the Conditions of Participation, at

least in the Medicare program as I

understand it, the patient must be given a

choice in regards to their care giver.

As you can see by our attachments, the

hospital not only doesn’t give us referrals: it

also tries to take the ones we have. We have

also been told by people who have been in

the hospital that Heritage was never

mentioned to them. They were just informed

that the hospital would be providing Home

Health services when they went home or they

stated the doctor has ordered Home Health

and the hospital would be sending someone

out.

Before we arrived, neither of the hospital

agencies offered weekend care or 24 hour on

call services. We offer this as part of our

normal patient care. Also, we utilize LPNs for

home health aids. Now due to competition,

they have upgraded their service to include

both of these. Without the competition factor,

they would never have upgraded their

services. If hospitals are permitted to

monopolize the Home Health service the way

they do now, there will not be any choice as

no other home health agency will be able to

survive.

In the counties where there are no Hospital

based HHAs we have had no problems with

them and each have their own mechanism for

issuing referrals. The hospitals refer in any of

the following manners:

1. Allows the review of the admissions

sheets daily.

2. Has a rotation basis if the person does

not have a preference after given a choice.

3. If an agency had previously provided

services, they will call that agency first or ask

the individual if they would like to continue

with the agency they had previously used.

4. The discharge planner makes a notation

in the medical chart to the doctor such as

would you like to order home health.

5. Schedule discharge planning meetings

held with ancillary service providers.

Brochures of ancillary services are given to

the patient. One of the hospital’s provides

these brochures in their packet that is given

to every one that is admitted.

Is there some sort of mechanism, that could

provide statistical data to show how many

Home Health referrals are made and to what

agency? If there is not, there should be and

it should also be public information.

We are a Medicare Certified and State

Licensed agency which all home health

agencies must be to provide Medicare

services. In the last two surveys, we did not

have any deficiencies so not only do we meet

the required guidelines, but this verifies that

we provide quality care.

This is only a small sampling of some of

the problems that are occurring. If a

judgement is in favor of the hospital based

agencies, it would only compound problems

for existing Home Health Agencies. Your

decision will have a very large impact on the

hospital referral processes in the future. I

would like very much to converse with you

on this subject. Please call me at (406) 443–

2186.

Sincerely,

Matthew F. Komac,

Administrator.

Metro Home Health Care Services, Inc.

3200 Greenfield Road, Suite 260, Dearborn,

Michigan 48120, Telephone: (313) 336–6303,

FAX: (313) 336–7157

November 21, 1995.

Ms. Gail Kursh,

Chief, Professions & Intellectual Property

Section/Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, NW., Room 9300,

Washington, DC 20530.

Dear Ms. Kursh: Hospitals have cost the

Medicare program hundreds of millions of

dollars by shifting hospital costs down into

their Medicare home health agencies (HHA).

These agencies are paid cost, allowing the

hospital to profit from shifting expenses to its

home care agency.

This encourages the hospital to increase

referrals to its HHA because the bigger its

hospital based HHA, the more of the

hospital’s costs are paid for under the

Medicare home health agency benefit. The

attached will show that and the American

Hospital Association advocates its hospitals

to maximize Medicare reimbursement this

way.

Should the Department of Justice

encourage hospitals to make profits off

Medicare referrals?

Sincerely,

Richard A. Porter,

President/Administrator.

Numerous Enclosures

St. Francis Hospital

2016 South Main Street, Maryville, MO

64468, Phone: (816) 562–2600, Fax: (816)

562–2411

December 26, 1995.

Mr. Edward D. Eliasberg, Jr.

Professions in Intellectual Property,

Bicentennial Building, Room 9422, 600

E. Street NW, Washington, DC 20530

Dear Mr. Eliasberg: I’m writing this letter

relative to the allegations filed against

Heartland Health System in St. Joseph,

Missouri. There is a group of citizens in the

St. Joseph area who refer to their coalition as

the Coalition for Quality Health Care. As a

part of their information campaign, they are

telling people that Heartland Hospital owns

rural hospitals in Northwest Missouri,

including St. Francis Hospital in Maryville.

I’m writing this letter to set the record

straight that St. Francis Hospital, Maryville,

Missouri, is an independent, not-for-profit

corporation whose sole member is SSM

Health Care System of St. Louis, Missouri.

The sponsoring organization of SSM Health

Care System is the Franciscan Sisters of Mary

of St. Louis, Missouri. Please understand that

St. Francis Hospital is not owned, operated,

managed, or controlled by Heartland Health

System.

If you have any questions in this regard,

then please contact me.
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29869

Sincerely,

Ray Brazier,

President.

To Whom It May Concern: Enclosed are

some clippings from the St. Joseph, Missouri

newspaper. Perhaps you have already

received copies of them, but if not, please

read them.

It would be well if some were to come

investigate the situation in St. Joseph. I am

sure you know a lot about what is going on,

but probably there is much you don’t know.

What we really need is a hospital that will

be in competition with Heartland West.

When an individual has surgery, they only

keep them for one, two, or three days,

regardless of how serious it might be. They

are very short of rooms at Heartland East and

people often are sent home and called when

a room is available. This is ridiculous since

Heartland West is setting down there with

lots of vacancies. They have spent Millions

of dollars to add on at Heartland East but

none of the building has helped the room

situation. They are trying to get a monopoly

on all the doctors in town, but some are not

joining them.

Heartland West is to be turned into a center

for long term care—mostly older people. On

the 5th floor of this institution is a Mental

Health area which supposedly is locked at all

times. But some of those people could find

a way to get off the floor and it would be very

dangerous for the older people who might be

living there. They closed the emergency room

which was convenient to people who do not

have cars, etc. and everyone has to go to

Heartland East, waiting several hours before

being taken care of.

I do not wish to sign this letter, but I do

feel the government should step in and

straighten things out. They are short of

nurses and admittance help and when

someone quits they do not replace them.

Those going in on emergency or accident

have to be taken in the front door of the

hospital where every one can see them. 2

young girls were taken there with serious

injuries following a car accident. They had to

spend the night in the surgery room until

rooms were available for them in ICU.

This is just a little about the ways things

are and I thought I could add it to your

investigation.

Shepherd’s Services, Inc.

12970 Pandora Drive, Suite 200, Dallas, TX

75238, (214) 340–3193, (214) 340–3195 Fax

November 29, 1995.

Gail Kursh,

Chief, Professions & Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E. St. NW., Room 9300, Washington,

DC 20530

Re: United States v. Health Choice of

Northwest Missouri, Inc. et al., Case No.

95–6171–CV–SJ–6, District Court for the

Western District of Missouri

Dear Ms. Kursh: We would like to

comment on the proposed final judgment in

the above case:

Since we do not have the full pleading, we

are not completely aware of the full scope of

this litigation. We are aware, however, of the

portion that would effect our home health

care agency, and—indeed—the entire home

health care industry. We are most concerned

about those who are covered by Medicare

and Medicaid, or by personal pay. Since

HMOs have already restricted the patient’s

choices by their system of operation, this

essential removes options from the hospital

as well.

1. We think the system proposed by

Heartland Health System, is extremely

prejudicial to other home health providers in

the community. Since the legislation

enabling Medicare and Medicaid is founded

on a basic principle that patients have true

freedom on choice—and mandates such—any

action by a health care provider that

intimidates the patient in any way, either

overtly or covertly, is contravening the

intention of the law.

a. In the initial contact, the hospital is, in

essence, questioning the physician’s

competence in his ability to name a provider.

Since the same Patient’s Rights extend to the

physician, it would be hoped—but often

unfulfilled—that the physician or his staff

would have educated the patient about

freedom of choice.

b. The proposed resolution, written with

an extreme bias in favor of Heartland Health

System, virtually guarantees no referrals in

all but the most exceptional cases. The

patient is not advised of his rights under

Medicare or Medicaid, but only asked if there

is a preferred provider. Since many, if not

most, of the patients we have on service were

unaware of their rights before they were

explained to them, simply asking if a

provider is preferred is going to elicit, in

most cases, an uneducated answer, not an

informed one.

Example:

1. An elderly patient was admitted from

our service to a local hospital. The discharge

planner of the hospital was told of the

patient’s relationship to our agency. Upon

discharge the patient was advised, while still

very disoriented, that home care had been

ordered. The planner asked if the patient had

a preference. Upon being asked, the patient

could remember our Director of Nurse’s name

and the aide’s name, but not our agency

name. The planner discharged the patient to

the hospital’s agency without any attempt to

help the patient find us. Our brochure was

on the table but was out of sight of the

patient. Our name was in the patient’s chart.

Rather than assisting the patient, the planner

simply said they would take care of it. When

the agency showed up for a visit, the patient

called us to see if we could send the previous

nurse and aide were available since they had

been so wonderful to her. Finding out what

had happened, we asked the agency to

transfer the patient. They refused. Following

up, we advised the patient of the Medicare

rights and the choice of provider clause. The

patient, ‘‘didn’t want to make the hospital

angry’’ and did not change.

c. In the second phase of the proposed

process, Heartland can give the patient a full

sales pitch, again with no reference to patient

rights, and not mention other possible

options. Only a very assertive patient would

object and ask about other options. Again, the

reasons are many, but ignorance of the

system is very high on the list. Since

Medicare will not reimburse advertising, the

major hospitals, with huge financial reserves

from other income sources, have done

widespread public relations campaigns.

Therefore, they have name recognition with

the patients. After all, they are often in a

hospital with the same, or similar name.

Name recognition and credentials do not

necessarily equate with providing quality

care, as so many of those covered by HMOs

have found to their dismay. In Texas the law

prohibits an agency from having to be Joint

Commission certified since Medicare

certification is equivalent.

Again, in this phase, the patient who

would be assertive enough to want additional

information to make an informed, intelligent

decision, is essentially left to his or her own

devices by the abstract referral to the

telephone book. No attempt is made to

provide the patient reasonable service. If the

patient asks for assistance a second time, the

planner gives verbal choices. It is widely

recognized that, in terms of mental retention

verbal presentation which is the least

preferred method of communication.

Point of information:

The discharge planner was a disinterested

party in terms of who provided the proposed

care, and was primarily a patient advocate.

For many years, hospitals used one of two

methods for making referrals:

1. A rotation between agencies that had

signed up with the hospital, or:

2. Agencies provided the hospital

information about their services that could be

distributed to the patients.

A suitably austere planner could, again,

intimidate the patient with lack of assistance

and this barrage of noninformation.

Example:

1. A patient who chose our service before

admission to a local hospital: Although the

patient was committed to service with us, the

discharge planner, who was actually an

employee of the hospital’s home health care

agency, refused to discharge the patient to us.

Earlier in the afternoon the same social

worker had informed us that the patient was

not going to be released until the next day.

That afternoon the patient was abruptly

discharged to the hospital agency. When the

patient objected he was told, in essence, the

hospital did not know us. If our

administrator had not happened to have

stopped by while the patient was being

transferred to a wheel chair for discharge, he

would have been at home under the

hospital’s service in spite of his objections.

This was a very assertive client. You can

imagine how much courage it would have

taken for someone who was frail and elderly

to offer this much resistance.

Note also the language in the proposed

final judgment. ‘‘* * * the referring person

cannot make a recommendation. * * *’’ This

is an extremely restrictive phrase for a legal

judgment. A planner will be in violation of

the judgment if any other phraseology is

used.

2. In clinical professions engaged in such

practices as counseling—including social

workers covered by their own code of

ethics—a client is to be offered three choices
29870 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

during a referral, and is informed how to

make an informed choice about other

options. In relationships between home

health care, and related services, and

hospitals this ethical courtesy not followed.

The Texas Association for Home Care

(TAHC), of which our agency is a member,

is extremely concerned about ethical

practices in this area, and recently

unanimously passed a Code of Ethics. The

Code covers both free standing and hospital

based agencies who are members of TAHC.

Two points are essential to our cooperative

efforts to provide the highest quality of care

to our clients:

a. Agencies shall honestly and

conscientiously cooperate in providing

information about referrals and shall work

together to assure comprehensive services to

their clients and their families.

b. Member agencies shall not engage in

coercive or unreasonably restrictive

exclusionary behavior which would restrict

or impede consumer choice of provider

agencies. A member agency or related entity

that provides a screen to clients for home

care referrals shall not use that position to

influence a client’s choice to direct referrals

to itself, and shall inform clients of the

availability of home care providers and

advise clients that they have the right to

choose the provider they prefer.

Other Observations

1. Following these guidelines would not be

excessively restrictive on hospitals. They

would allow them access to the patients on

an equal footing with other providers. The

very fact that the planner is an employee of

the hospital places that person in a ‘‘position

of influence’’ that is hardly negligible in

terms of eliciting preferential responses.

2. In a metropolitan area it is unreasonable

to expect the discharge planner to be

acquainted with every available agency, nor

to serve as a spokesperson for other agencies.

The disclaimer, (‘‘no independent review

* * *’’ etc.) is appropriate. As we receive

requests for information we attempt to

educate the prospective patient. It is

reasonable to give basic guidelines on how to

select providers of any ancillary services.

Again, the goal would be to provide equal

footing as outlined in the TAHC Code of

Ethics. It is not unreasonable to ask the

hospital to provide basic patient rights

information to their patients. We utilize

several different suppliers of DME

equipment. Where a major appliance, for

example a particular bed required for the

patient’s care, we advise them of other

options that are available to them.

Point of information:

In most cases the patient truly has no

preference and follows our recommendation

because they trust us.

Recognizing this ‘‘position of influence,’’

the hospital will have many patients who do

not have a preference. There will be plenty

of opportunity for them to admit those

patients without prejudicing opportunities

for other providers.

Recommendations

We believe the following guidelines are

patient oriented and equitable for all

providers.

1. If a physician orders a specific provider

that order should be honored. An order for

Ancillary Services is as binding as any other

medical order. A nurse does not ask the

patient if medical orders are acceptable.

2. If the patient does not express a

preference, the patient should be educated

about how to make an informed decision

rather than summarily making decisions for

them.

3. In recommending their own agency,

discharge planners should provide available

information on other providers. As a

minimum the planner should provide the

applicable section of the classified section of

the telephone book in which alternative

providers are listed.

4. If brochures are provided from the

hospital agency, brochures from other

agencies should also be provided to help the

patient in making an informed decision.

Thank you for your time in reviewing and

considering our comments and

recommendations.

Sincerely,

Richard G. Copeland,

Administrator.

January 18, 1996.

Gail Kursch.

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street NW., Room 9300,

Washington, DC 20530.

Dear Ms. Kursh: I am writing in support of

the DOJ’s proposed final judgment for United

States vs. Health Choice of Northwest

Missouri, Inc., Case Number 95–6171–CV–

SJ–6.

As a home health care professional, I am

very concerned about the protection of

patient choice and the quality of health care

all patients receive.

The only home care agency of which a

hospital can speak with authority and

assurance is its own. Recommending other

agencies is a liability issue. There is no way

hospital administration and discharge

planners can be sure of the quality of services

provided by other agencies.

If a patient has a request for an agency,

other than that recommended by his

physician, he simply needs to indicate that

preference to the appropriate party. If the

patient is interested in other providers,

referring them to the yellow pages provides

an organized and unbiased information

source.

Thank you for the opportunity to voice my

opinion.

Respectfully,

Anne Santora

Ramadan Hand Institute, Lake Butler

Hospital

850 E. Main Street, Lake Butler, FL 32054,

(904) 496–2323

January 19, 1996.

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street NW., Room 9300,

Washington, DC 20530

Dear Ms. Kursh: I am writing in support of

the DOJ’s proposed final judgment for United

States vs. Health Choice of Northwest

Missouri, Inc., Case Number 95–6171–CV–

SJ–6.

As a home health care professional, I am

very concerned about the protection of

patient choice and the quality of health care

all patients receive.

The only home care agency of which a

hospital can speak with authority and

assurance is its own. Recommending other

agencies is a liability issue. There is no way

hospital administration and discharge

planners can be sure of the quality of services

provided by other agencies.

If a patient has a request for an agency,

other than that recommended by his

physician, he simply needs to indicate that

preference to the appropriate party. If the

patient is interested in other providers,

referring them to the yellow pages provides

an organized and unbiased information

source.

Thank you for the opportunity to voice my

opinion.

Respectfully,

Pamela B. Howard,

Hospital Administrator.

January 18, 1996.

Gail Kursch,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street NW., Room 9300,

Washington, DC 20530

Dear Ms. Kursh: I am writing in support of

the DOJ’s proposed final judgment for United

States vs. Health Choice of Northwest

Missouri, Inc., Case Number 95–6171–CV–

SJ–6.

As a home health care professional. I am

very concerned about the protection of

patient choice and the quality of health care

all patients receive.

The only home care agency of which a

hospital can speak with authority and

assurance is its own. Recommending other

agencies is a liability issue. There is no way

hospital administration and discharge

planners can be sure of the quality of services

provided by other agencies.

If a patient has a request for an agency,

other than that recommended by his

physician, he simply needs to indicate that

preference to the appropriate party. If the

patient is interested in other providers,

referring them to the yellow pages provides

an organized and unbiased information

source.

Thank you for the opportunity to voice my

opinion.

Respectfully,

Patti Hecht

January 18, 1996.

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street N.W., Room 9300,

Washington, D.C. 20530.

Dear Ms. Kursh: I am writing in support of

the DOJ’s proposed final judgment for United
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29871

States vs. Health Choice of Northwest

Missouri, Inc., Case Number 95–6171–CV–

SJ–6.

As a home health care professional, I am

very concerned about the protection of

patient choice and the quality of health care

all patients receive.

The only home care agency of which a

hospital can speak with authority and

assurance is its own. Recommending other

agencies is a liability issue. There is no way

hospital administration and discharge

planners can be sure of the quality of services

provided by other agencies.

If a patient has a request for an agency,

other than that recommended by his

physician, he simply needs to indicate that

preference to the appropriate party. If the

patient is interested in other providers,

referring them to the yellow pages provides

an organized and unbiased information

source.

Thank you for the opportunity to voice my

opinion.

Respectfully,

Ann Reilly

Athens-Limestone Hospital

700 West Market Street, P.O. Box 999,

Athens, Alabama 35611, Phone (205) 233–

9292.

January 19, 1996.

Ms. Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street N.W., Room 9300,

Washington, D.C. 20530.

Dear Ms. Kursh: I am writing in support of

the DOJ’s proposed final judgment for United

States vs. Health Choice of Northwest

Missouri, Inc., Case Number 95–6171–CV–

SJ–6.

As a home health care professional, I am

very concerned about the protection of

patient choice and the quality of health care

all patients receive.

The only home care agency of which a

hospital can speak with authority and

assurance is its own. Recommending other

agencies is a liability issue. There is no way

hospital administration and discharge

planners can be sure of the quality of services

provided by other agencies.

If a patient has a request for an agency,

other than that recommended by his

physician, he simply needs to indicate that

preference to the appropriate party. If the

patient is interested in other providers,

referring them to the yellow pages provides

an organized and unbiased information

source.

Thank you for the opportunity to voice my

opinion.

Respectfully,

Philip E. Dotson,

Chief Executive Officer.

Mississippi Baptist Medical Center

January 29, 1996.

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, 600 East Street

NW., Room 9300, Washington, DC

20530.

Dear Ms. Kursh: I am writing in support of

the DOJ’s proposed final judgment for United

States vs. Health Choice of Northwest

Missouri, Inc., Case Number 95–6171–CV–

SJ–6.

As a home health care professional, I am

very concerned about the protection of

patient choice and the quality of health care

all patients receive. Also, as a member of

NAHC, I am disappointed in its opposition

to this DOJ ruling.

The only home care agency of which a

hospital can speak with authority and

assurance is its own. Recommending other

agencies is a liability issue. There is no way

hospital administration and discharge

planners can be sure of the quality of services

provided by other agencies.

If a patient has a request for an agency,

other than that recommended by his

physician, he simply needs to indicate that

preference to the appropriate party. If the

patient is interested in other providers,

referred them to the yellow pages provides an

organized and unbiased information source.

Thank you for the opportunity to voice my

opinion.

Respectfully,

Dan Gore,

Asst. Exec. Dir., Mississippi Baptist Medical

Center, Central Mississippi Health Care at

Home.

St. Joseph Convalescent Center

811 North 9th Street, St. Joseph, MO 64501,

Phone: (816) 233–5164.

February 5, 1996.

Edward D. Eliasberg, Jr.,

U.S. Department of Justice, Antitrust

Division, Bicentennial Building, 600 E

Street NW., Washington, DC 20530.

Re: U.S. v. Health Choice of Northwest

Missouri, Inc.

Dear Mr. Edward D. Eliasberg, Jr. I am

returning my letter for your record so that

you may submit it. If you need any more

information I would be happy to cooperate in

this matter.

Thank you.

Lisa Smith

U.S. Department of Justice

Antitrust Division, Bicentennial Building,

600 E Street, NW, Washington, DC 20530

January 18, 1996.

Ms. Lisa Smith

St. Joseph Convalescent Center, P.O. Box 283,

881 North 9th Street, St. Joseph, MO

64502

Re: U.S. v. Health Choice of Northwest

Missouri, Inc.

Dear. Ms. Smith: This is in regard to the

enclosed October 4, 1995 letter from you to

Gail Kursh. You apparently sent us the letter

in order to comment upon the proposed Final

Judgment in United States v. Health Choice

of Northwest Missouri, Inc. el al. You request

that the letter be kept confidential.

We are returning your letter because the

federal statute that governs the entrance of

proposed final judgments in federal

government civil antitrust cases, 15 U.S.C.

§ 16(b)–(h), requires us to publish and file

with the Court all comments received. We

were not sure you were aware of this

provision.

You are, of course, free to resubmit the

letter to us if you have no objection to your

identity being disclosed. You also can, if you

like, submit a redacted or anonymous letter

or do nothing at all.

We are trying to finish our statutorilyrequired response to the comments as

expeditiously as possible. We therefore

request that you promptly send us any

comment you care to submit or resubmit.

Sincerely yours,

Edward D. Eliasberg, Jr.,

Attorney.

Enclosure

October 4, 1995.

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 E Street, N.W. Room 9300,

Washington, D.C. 20530

Dear Ms. Kursh: We need help now. I have

been in this industry since 1984 and have

never experienced such shortage of patients

for such a long period of time. The trend

right now is if you send a resident to the

hospital for any reason they are treated and

then sent to the skilled unit or acute unit at

Heartland West. They are kept for as many

days as medicare allows. When we call the

social service to check on our patients we are

given the run around. Some patients are

tentatively placed in another facility that was

owned by Heartland, until we called the floor

to check on our resident and found out what

was going on. They were going to place a

dialysis patient with history of

noncompliance with diet and fluids and

fluctuating blood sugars to a residential care

facility. They do not allow us to be a part of

the care plan process during their stay. When

you try to contact Social Service they no

longer have anyone to answer the phone so

you must leave a message and they seldom

return your call. When they do return your

call they either do not know what is going

on or they are uncooperative. When you call

the resident’s physician to check on the

patient they do not know what is going on

with the resident—they do not make

discharge plans the paid Heartland staff and

Heartland doctors make these decisions.

Today for instance, one of our residents who

had been hospitalized recently was to return

at 12:30 p.m. At 2:15 p.m. today she had still

not returned. We tried to find out what was

going on through social service and the

floor—they had no idea what was going on—

so we went and picked up the resident. We

have been told that the resident is asked to

sign a paper stating they want to go to

Heartland nursing home if they need nursing

home care. These elderly patients are not

given a choice as to placement outside of

Heartland. We talked to the head of social

service at Heartland and he didn’t even know
29872 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

what we offered. We have been informed that

if social service does try to place outside of

Heartland they are reprimanded for this

practice. In less they have a group of

independent social workers or a group of

people to evaluate what they are doing with

these elderly people this practice will not

change. I have tried to involve many groups

at different times and no one wants to help

when it comes to Heartland. Heartland owns

this town and no one will stand up to them.

What they are doing is wrong—the monopoly

is wrong. The money that medicare and

medicaid pays them is unbelievable.

Heartland’s nursing home should get the

same reimbursement and inspectors with the

same rules and regulations that we have to

follow. All Heartland West is a very large

nursing home. A couple of years ago when

we were hearing the rumors about them

starting there nursing facility, they had

meetings with the nursing home industry

denying these rumors. They promised to

have meetings with us on quarterly basis to

keep us informed of what was going on but

there was no plans for a nursing home. That

was the last meeting that they ever had. I can

not imagine the government allowing

something so unfair going on. They say

nursing homes cost the government so much

money but we can not cost nearly as much

as these type of setups. I hope someone can

help us. Everyone in health care has felt a

large impact due to Heartland Systems. When

we talk to people they do not get information

about any outside nursing homes. We have

taken brochures to Heartland but I feel they

are probably never circulated. We used to

average 4 or 5 residents admitted from

Heartland each month since January 1995.

July 26, 1995 was the last new resident that

we received from Heartland. On August 23,

1995 we received a new resident who

expired within a few days. These are the type

of patients we get now hard to take care of,

very ill or the patients you can rehab to go

home. We have gotten one call on a new

resident but she ended up going to skilled

because she still had medicare days to use.

They make no bones about what they are

doing. We call them to check on them on

skilled ward and they say they have only

been there for a few days and their time is

not up they will contact me when it is. They

are bleeding medicare and medicaid for all

they can. When we tell the social workers

what we offer they act like this is the first

time they have ever heard of us. They are

building a residential facility out by the new

hospital also. How can this be possible? They

don’t need a certificate of need. They are

trying to buy other nursing homes in town

also. Please try to do something for us.

There are a lot of good nursing homes in

this town but how long can we all survive

without patients, not very long. This is so

unfair and we feel that no one can hear our

cries. I have even made trips to the hospital

trying to get patients but these fall on deaf

ears also. Between the hospital and home

health they pretty much control the elderly

population in this town and are fully aware

of this. Help us know before it is to late. I

hope this is kept in the highest confidence

for we are struggling now to get patients and

if they knew what we are telling you they

would really give us a hard time. Thank you

for your time.

Sincerely,

Lisa Smith

Raulerson Hospital

January 30, 1996.

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street N.W., Room 9300,

Washington DC 20530

Dear Ms. Kursh: I am writing in support of

the DOJ’s proposed final judgment for United

States vs, Health Choice of Northwest

Missouri, Inc., Case Number 95–6171–CV–

SJ–6.

As a home health care professional, I am

very concerned about the protection of

patient choice and the quality of health care

all patients receive.

The only home care agency of which a

hospital can speak with authority and

assurance is its own. Recommending other

agencies is a liability issue. There is no way

hospital administration and discharge

planners can be sure of the quality of services

provided by other agencies.

If a patient has a request for an agency,

other than that recommended by his

physician, he simply needs to indicate their

preference to the appropriate party. If the

patient is interested in other providers,

referring them to the yellow pages provides

an organized and unbiased information

source.

Thank you for the opportunity to voice my

opinion.

Respectfully,

Frank Irby,

Chief Executive Officer.

Raulerson Home Care

217 S.W. Park Street, Okeechobee, Florida

34974, (941) 357–0080, (800) 440–2227, Fax

(941) 357–1081

January 30, 1996.

Gail Kursh,

Chief, Professions and Intellectual Property

Section, Health Care Task Force,

Department of Justice, Antitrust Division,

600 East Street N.W., Room 9300,

Washington DC 20530

Dear Ms. Kursh: I am writing in support of

the DOJ’s proposed final judgment for United

States vs, Health Choice of Northwest

Missouri, Inc., Case Number 95–6171–CV–

SJ–6.

As a home health care professional, I am

very concerned about the protection of

patient choice and the quality of health care

all patients receive.

The only home care agency of which a

hospital can speak with authority and

assurance is its own. Recommending other

agencies is a liability issue. There is no way

hospital administration and discharge

planners can be sure of the quality of services

provided by other agencies.

If a patient has a request for an agency,

other than that recommended by his

physician, he simply needs to indicate their

preference to the appropriate party. If the

patient is interested in other providers,

referring them to the yellow pages provides

an organized and unbiased information

source.

Thank you for the opportunity to voice my

opinion.

Respectfully,

Lisa G. Smith,

Home Health Administrator.

Missouri Alliance for Home Care

431 E. McCarty Street, Jefferson City, MO

65101–3103, 573–6342, Fax 573–6343

February 28, 1996.

Honorable Howard Sachs,

U.S. District Court, Western District, Western

Division, U.S. Court House, 811 Grand

Ave., Kansas City, MO 64106

Re: Proposed Final Judgment: United States

v. Health Choice of Northwest Missouri,

Inc., et al., Civil No. 95–6171–CV–SJ–6

(W.D.Mo.)

Dear Judge Sachs: The Missouri Alliance

for Home Care (MAHC) is responding to the

above captioned case concerning the

provision of ancillary services that is

attached to the Final Consent Judgment

against Heartland Health System, Inc.

MAHC is the home care industry trade

association in Missouri. Membership

includes companies that provide home

health, hospice, home infusion therapy, inhome long term care services and home

medical equipment. The membership of

MAHC is broad-based representing hospital

based, as well as, private freestanding

companies.

MAHC feels that the final judgment fails in

several important areas:

1. It does not meet the letter of the law

establishing criteria for fair competition as

intended by Medicare and Medicaid.

2. It helps create a monopoly in an area

well served by competitive providers.

3. It does not consider patients without

adequate health coverage allowing for cherry

picking of patients with financial resources.

4. It treats patients as a commodity to be

controlled, directed, indeed steered to

ancillary services.

5. This decision has national ramifications

and should be widely disseminated. A

national understanding of this new referral

policy and its impact on consumers and

providers is crucial. The critical nature of

these ramifications further impresses the

need to ensure this policy complies with the

rules set forth under the Medicare Act,

something the Heartland policy does not do.

MAHC feels the patient should be

empowered to make decisions. They should

be informed of the process of arranging for

home care services, what alternative

providers are available and the financial

costs to them depending upon their decision.

At a time when the patient is at their most

vulnerable they turn to the physician and

hospital to give them and their families help

in selecting services to ease the transition to

home. Many of these patients may not realize

that they have a choice. If hospital personnel

or their physician steers their care to hospital

based services the patient will probably

accept, without question, that referral, thus

preventing them the option to exercise their
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29873

right to choose. The very act of forcing a

patient to ask twice for alternative providers

is demeaning to them. We should be

servicing the sick by assisting them to a

comfortable transition home not

manipulating them.

MAHC favors several changes to the

judgment:

1. Patients should be informed and given

the power to make a choice. Patients should

be given a patients Bill of Rights to educate

themselves. They should understand what

choices they will need to make, how to go

about making those choices and any

limitations of their insurance coverage or

payor for those services. If the patient

previously had a provider that they wish to

continue using that choice should be

allowed.

2. Patients should be given information

about alternative providers. The hospital

discharge process should provide each

patient requiring any home care service with

a list of companies that can provide the

services to meet the patient’s needs. The

hospital should be required to maintain and

make available an up-to-date listing of

qualified providers. The hospital ancillary

services should be on the list in alphabetical

order. The patient should be assured that

selection of any company other than the

hospitals’ affiliate will not affect their care at

the hospital or prevent them from receiving

future care from the hospital. This list should

contain basic information about services

available from each provider including how

the patient contacts the company and it

should be updated quarterly.

3. The patient’s discharge information

should be shared. As the patient discusses

options with the competing companies,

appropriate discharge information about their

medical care and needed services in the

home should be shared with the agency the

patient selects. All companies should discuss

how services will be provided and what

costs, if any, the patient will be expected to

pay.

4. Patients have the right to be aware of

any financial relationships or incentives

between the person making a referral and the

provider. If the patient and the patient’s

family have no preference, and no desire for

written information, then the patient’s

physician should make the choice of a home

care provider. There should be no pressure

or incentive on the physician or any of the

hospital medical staff to refer patients to the

hospital’s affiliated services. If there is a

financial relationship between the provider

and the physician, including but not limited

to the physician being an employee of or

having a financial interest in the hospital, or

the physician’s practice being owned by the

hospital, this must be disclosed to the

patient. Patients have a right to know if the

physician or hospital has a financial interest

in the provider or company where they are

referred.

This Final Judgment sends a confusing

message from the government. Decisions in

the past have sought to lower health care

costs, indeed, the government has supported

competition as a way to decrease costs. Past

policy and current Medicare law encourages

patient freedom of choice of providers. Legal

action by the Department of Justice has been

taken in the past to prevent referrals by

health care decision makers that have a

financial interest in provider companies.

The Final Judgment seems to refute all of

these past decisions. Government policy

needs to give consistent direction. MAHC

encourages you to reconsider your decision

regarding the referral policy and to instead

insist on a national policy which protects the

patient’s right to choose and promotes fair

market competition among providers.

Sincerely,

Dale E. Smith,

President, Missouri Alliance for Home Care.

cc: Gail Kursh, Esq., Chief Professional &

Intellectual Property Section, Health Care

Task Force, Department of Justice

Jay Nixon, Attorney General of Missouri

[FR Doc. 96–13754 Filed 6–11–96; 8:45 am]

BILLING CODE 4410–01–M