[Federal Register Volume 61, Number 114 (Wednesday, June 12, 1996)]
[Notices]
[Pages 29800-29873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13754]




[[Page 29799]]


_______________________________________________________________________

Part II





Department of Justice





_______________________________________________________________________



Antitrust Division



_______________________________________________________________________



United States v. Health Choice of Northwest Missouri, Inc., et al.; 
Public Comments and Response on Proposed Final Judgment; Notice

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

[[Page 29800]]



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. 
Sec. 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. Sec. 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. Sec. 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 Paras. 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 
provider-controlled 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.
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    \1\ The 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.
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    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\
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    \2\ The 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.
    \3\ Comments 1, 7-8, 11, 15-16, 25, and 142-143.
    \4\ Comments 3-6, 9-10, 12-14, 17-18, 20-21, 53, 151, and 155.
    \5\ Comments 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.
    \6\ Comments 28, 35, 57-59, 72-73, 84, 129, 134-135, 145-150, 
and 152-153.
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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.

[[Page 29801]]

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\
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    \7\ This 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.
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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-provider-owned 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.
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    \8\ Comment 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.
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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).
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    \9\ The 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.
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    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\
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    \10\ Many 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).
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    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

[[Page 29802]]

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\
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    \11\ Heartland'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.
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    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
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    \12\ Several 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.
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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
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    \13\ For 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, Sec. 407.020 RSMo, and the 
Missouri Antitrust Law, Secs. 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, Sec. 407.020 RSMo.
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    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.
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    \14\ The 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).
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    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

[[Page 29803]]

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.
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    \15\ This 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).
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    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.,__U.S.__, 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\
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    \16\ At 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. para. 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. para. 70,485 (D. Minn. 
1993).
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    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

[[Page 29804]]

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\
---------------------------------------------------------------------------

    \17\ By 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. para.13,104 at 20,574.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \18\ The Associated Milk Producers decree, even as supplemented 
by Judge Oliver, did not contain this provision. 394 F. Supp. at 49-
58.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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. para. 
61,508 (W.D.Mo. 1977).
---------------------------------------------------------------------------

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. 
Sec. 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

[[Page 29805]]

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.
---------------------------------------------------------------------------

    \20\ The Western Electric decision concerned a consensual 
modification of an existing antitrust decree. The Court of Appeals 
assumed that the Tunney Act was applicable.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \21\ The 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.
---------------------------------------------------------------------------

    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:

    \22\ Citing 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. Sec. 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. Sec. 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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \23\ Managed 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).
---------------------------------------------------------------------------

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. Sec. 16(d) requires, the public comments and this Response 
have been published in the Federal Register.

    Dated: May 17, 1996.

        Respectfully submitted,


[[Page 29806]]


----------------------------------------------------------------------
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.

----------------------------------------------------------------------
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

----------------------------------------------------------------------
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 non-physician 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. 
Secs. 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. 
Sec. 16(d).

    Dated: January 19, 1996.

        Respectfully submitted,


[[Page 29807]]


----------------------------------------------------------------------
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.

----------------------------------------------------------------------
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

----------------------------------------------------------------------
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

[[Page 29808]]

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, Anti-trust 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, mis-diagnosis 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.


[[Page 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, Anti-trust 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 non-profit 
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 hospital-based 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

[[Page 29810]]

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 1\1/2\ 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.

[[Page 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 Sec. 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. Sec. 16(b), were considered in 
formulating the proposed Final Judgment.'' In light of the fact that 
this suit

[[Page 29812]]

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 (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 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

[[Page 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

[[Page 29814]]

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, Anti-Trust 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,

[[Page 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 home-health 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 slap-in-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.


[[Page 29816]]


        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 self-referral 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

[[Page 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,

[[Page 29818]]

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 hospital-based 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

[[Page 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. Free-standing 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

[[Page 29820]]

``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 hospital-affiliated 
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 hospital-affiliated 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

[[Page 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. Sec. 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 __________, as a direct purchaser of 
inpatient acute-care 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. Sec. 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 health-care 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 
tax-exempt 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 tax-exempt hospital located at 120 South Filbert 
Street, Mechanicsburg, Pennsylvania.
    3. ``Polyclinic Health System'' (``PHS'') means the nonprofit tax-
exempt 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 third-party 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

[[Page 29822]]

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 199__ 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 low-cost 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 physician-hospital 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

[[Page 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 by-laws.
    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 ``most-favored-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

[[Page 29824]]

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

[[Page 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:
----------------------------------------------------------------------
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

[[Page 29826]]

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:--------------------------------------------------------------
D.O.B.-----------------------------------------------------------------

    Your physician(s) ____________, 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:------------------------------------------------
2. Equipment Provider:------------------------------------------------
3. Other:-------------------------------------------------------------

Reason for Choice: Check all that apply

____Previous Relationship with Home Health Company
____Patient/Family Preference
____Insurance Provider Directive
____Doctor Recommendation/Directive Explain: ________
____Hospital Recommendation/Directive Explain: ________
____Other Explain: ________
____Patient/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.

----------------------------------------------------------------------
Signature

----------------------------------------------------------------------
Date

----------------------------------------------------------------------
Relationship (if not patient)

Comments:-------------------------------------------------------------
(If unable to obtain signature)

Person Completing This Form:------------------------------------------

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

[[Page 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, free-standing 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)


[[Page 29828]]


    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 multi-hospital organization and our referrals 
decreased 30%. The Medical Director of this

[[Page 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, nurse-
owned 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, non-profit 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 above-referenced 
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.


[[Page 29830]]


        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. Sec. 1395a. A parallel provision applies to Medicaid 
recipients. 42 U.S.C. Sec. 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

[[Page 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 hospital-based 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 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 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,

[[Page 29832]]

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, county-operated 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:''
     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 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.
    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

[[Page 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. Sec. 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. Sec. 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. Sec. 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.

[[Page 29834]]

    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. Secs. 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. Sec. 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 Sec. 1128D(a)(2)(C) by 
Sec. 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.


[[Page 29835]]


      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.
---------------------------------------------------------------------------

    \1\ See 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).
---------------------------------------------------------------------------

    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, free-standing 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\
---------------------------------------------------------------------------

    \2\ See. e.g., State of Florida Health Care Cost Containment 
Board, Joint Ventures Among Health Care Providers in Florida (1991).
---------------------------------------------------------------------------

    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 non-hospital 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 free-standing 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.

[[Page 29836]]

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
---------------------------------------------------------------------------

    \3\ United States v. Topco Associates, 405 U.S. 596, 610 (1972).

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\
---------------------------------------------------------------------------

    \4\ Northern Pac. Ry. v. United States, 356 U.S. 1, 4 (1958).

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.
---------------------------------------------------------------------------

    \5\ E.g., FTC v. Ticor Title Ins. Co., 112 S. Ct. 2169 (1992); 
see generally 1 John J. Miles, Health Care & Antitrust Law Sec. 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.'').
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \6\ See generally Dana Priest, Clinton Health Plan Includes 
Broad ``Standard'' Benefits, The Washington Post, Sept. 4, 1993, at 
A1, A16.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \7\ See generally Rick Wartzman & Hilary Stout, Clinton Health 
Plan: Push Competition, Be Ready to Regulate, The Wall Street 
Journal, Sept. 13, 1993, at A1.
---------------------------------------------------------------------------

    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

[[Page 29837]]

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-of-reason 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.
---------------------------------------------------------------------------

    \8\ See, 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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \9\ One 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.
---------------------------------------------------------------------------

    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 post-merger market shares, usually over 50%.\12\ The 
agencies have challenged no hospital joint ventures.
---------------------------------------------------------------------------

    \10\ Appalachian Coals, Inc. v. United States, 288 U.S. 344 
(1933) (noting that antitrust laws have the adaptability of 
constitutional provisions).
    \11\ Recent 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.
    \12\ E.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)
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \13\ ABA Working Group on Health Care Reform, Antitrust 
Implications of Health Care Reform (May 14, 1993) at 2.
    \14\ Id. at 17.
---------------------------------------------------------------------------

    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 non-legalese 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\
---------------------------------------------------------------------------

    \15\ Attorney 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.
---------------------------------------------------------------------------

    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

[[Page 29838]]

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\
---------------------------------------------------------------------------

    \16\ The 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).
    \17\ Some 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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \18\ The 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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \19\ See eg., Atlantic Richfield Co. v. USA Petroleum Co., 110 
S.Ct. 1884 (1990).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \20\ Eastman Kodak Co. v. Image Technical Servs., Inc., 112 
S.Ct. 2072 (1992).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \21\ Beacon 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).
---------------------------------------------------------------------------

    The adverse effects on competition in home care markets can be 
magnified

[[Page 29839]]

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\
---------------------------------------------------------------------------

    \23\ The concern over steering of patients by physicians led 
Congress in the Omnibus Reconciliation Act of 1993, Sec. 13562, 
amending section 1877 of the Social Security Act (42 U.S.C. 
Sec. 1395nn), to prohibit physician ``self-referrals'' for certain 
designated services, including home health services.
    \24\ E.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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \25\ See generally Sandy Lutz, Hospitals Continue to Move Into 
Home Care, Mod. Healthcare, Jan. 25, 1993, at 28.
    \26\See 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.
---------------------------------------------------------------------------

    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

[[Page 29840]]

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

[[Page 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:

[[Page 29842]]

    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

[[Page 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 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 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 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 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.


[[Page 29844]]


      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

[[Page 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 community-based, 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

[[Page 29846]]

patient choice and fair competition (42 USC Sec. 1395a) and (42 USC 
Sec. 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. Sec. 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.


[[Page 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 long-term 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. Sec. 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 Secs. 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 para. 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. Sec. 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.

[[Page 29848]]

    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. Sec. 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, para. 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, para. 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 long-term 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

[[Page 29849]]

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.
---------------------------------------------------------------------------

    \1\ Attached as Exhibit 1 is a copy of the Heartland Ancillary 
Services Referral Policy which is incorporated into the terms of the 
proposed Final Judgment.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \2\ A copy of the Comment filed by the Coalition for Quality 
Healthcare with the Department of Justice is attached as Exhibit 2.
---------------------------------------------------------------------------

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. Secs. 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. Sec. 16(e).
---------------------------------------------------------------------------

    \3\ As 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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \4\ See, 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.).
    \5\ To 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. Sec. 16(f)(3). United 
States v. BNS, Inc., 858 F.2d 456, 459 (9th Cir. 1988).
    \6\ The 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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \7\ By 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.)
    \8\ On 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.)
---------------------------------------------------------------------------

    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 post-appeal 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 hospital-affiliated service 
providers when the patient is offered no meaningful choice among 
competing suppliers; \9\ refusing

[[Page 29850]]

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 Sec. 14.01 (Clark, Boardman & Callaghan 
1995).
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    \9\ Frequently, 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 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, Sec. 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\
---------------------------------------------------------------------------

    \10\ Attached 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.
---------------------------------------------------------------------------

    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 
Heartland-affiliated 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 non-
Heartland 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,

[[Page 29851]]

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.
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    \11\ Attached 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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \12\ See 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.
    \13\ See 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].
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \14\ See 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.
---------------------------------------------------------------------------

    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 Sec. 482.43.\15\ The new 
regulations require, among other things, that a Medicare/Medicaid 
participating hospital:
---------------------------------------------------------------------------

    \15\ Attached as Exhibit 8 is a copy of the Final Rule, 
published in 59 Fed. Reg. 64141 (December 13, 1994).
---------------------------------------------------------------------------

    (1) Identify at an early stage of hospitalization those patients 
likely to suffer adverse health consequences without discharge 
planning. Sec. 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. Sec. 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

[[Page 29852]]

which he or she entered the hospital. Sec. 482.43(b)(4).
    (3) Discuss the results of the evaluation with the patient or 
individual acting on his or her behalf. Sec. 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. Sec. 482.43(c)(1);
    (5) As needed, the patient and family members or interested persons 
must be counseled to prepare them for post-hospital care. 
Sec. 482.43(c)(5).
    The hospital has an obligation under these new regulations to 
evaluate the patient's capacity to return to the pre-hospitalization 
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\
---------------------------------------------------------------------------

    \16\ As of the date of filing this Memorandum, the HCFA had not 
yet issued new Interpretive Guidelines incorporating the referenced 
requirement.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \17\ Joint Commission for Accreditation of Healthcare 
Organizations, ``Patient Rights and Organizational Ethics,'' Sec. 1 
(1995).
---------------------------------------------------------------------------

    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 long-term 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,

[[Page 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, Sec. 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:


[[Page 29854]]


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 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 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


[[Page 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 hospital-based 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 hospital-based 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,
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 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 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 hospital-based 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 hospital-based 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,
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

[[Page 29856]]

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 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 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

[[Page 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. So-and-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 hospital-based 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 hospital-based 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.
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.


[[Page 29858]]


  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,

[[Page 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 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 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.

[[Page 29860]]

      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, community-based 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 hospital-based 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 community-based 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 hospital-based 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

[[Page 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based program has 
instituted unfair practices which have practically eliminated 
competition in our service area.

[[Page 29862]]

    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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based program has 
instituted unfair practices

[[Page 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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 hospital-based 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

[[Page 29864]]

States v. Health Choice of Northwest Missouri, Inc.
    In our own community, a local hospital-based 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 hospital-based 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 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,
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 Sec. 1395a) and 
Medicaid (42 USC Sec. 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

[[Page 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 deg., 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

[[Page 29866]]

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 hospital-based 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

[[Page 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

[[Page 29868]]

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.


[[Page 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

[[Page 29870]]

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

[[Page 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. Sec. 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 statutorily-required 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

[[Page 29872]]

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, in-home 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

[[Page 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