[Federal Register Volume 65, Number 49 (Monday, March 13, 2000)]
[Notices]
[Pages 13387-13390]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6045]


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FEDERAL TRADE COMMISSION

[File No. 971-0117]


Wisconsin Chiropractic Association, et al.; Analysis to Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before April 6, 2000.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Ave., NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: C. Steven Baker or Nicholas Franczyk, 
Federal Trade Commission, Midwest Region, 55 E. Monroe St., Suite 1860, 
Chicago, IL 60603-5701. (312) 960-5633.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of 
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby 
given that the above-captioned consent agreement containing a consent 
order to cease and desist, having been filed with and accepted, subject 
to final approval, by the Commission, has been placed on the public 
record for a period of thirty (30) days. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for March 7, 2000), on the World Wide Web, at ``http://www.ftc.gov/
ftc/formal.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, 600 Pennsylvania Avenue, NW, Washington, DC 
20580, either in person or by calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW 
Washington, DC 20580. Two paper copies of each comment should be filed, 
and should be accompanied, if possible, by a 3\1/2\ inch diskette 
containing an electronic copy of the comment. Such comments or views 
will be considered by the Commission and will be available for 
inspection and copying at its principal office in accordance with 
Section 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(6)(ii)).

Analysis of Proposed Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement from the Wisconsin Chiropractic Association 
(``WCA'') and its executive director, Russell A. Leonard, to a proposed 
consent order. The agreement settles charges by the Federal Trade 
Commission that the WCA and Mr. Leonard have violated Section 5 of the 
Federal Trade Commission Act by conspiring with some of the WCA's 
members and others to fix prices for chiropractic services and to 
boycott third-party payers to obtain higher reimbursement rates for 
services. The proposed consent order has been placed on the public 
record for thirty days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty days, the Commission will review the agreement and 
the comments received, and will decide whether it should withdraw from 
the agreement or make the agreement and proposed order final.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. The analysis is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms. Further, the proposed consent order has been entered 
into for settlement purposes only and does not constitute an admission 
by the WCA or Mr. Leonard that the law has been violated as alleged in 
the complaint.

The Complaint

    The WCA is a professional trade association of chiropractors with 
its principal place of business in Madison, Wisconsin. The WCA has 
approximately 900 chiropractor members. A substantial majority of the 
chiropractors licensed to practice in the state of Wisconsin are 
members of the WCA. The WCA exists and operates in substantial part for 
the pecuniary benefit of its members. Mr. Leonard is, and during the 
time period addressed by the allegations of the complaint was, the 
executive director of the WCA.
    Professional services performed by chiropractors include, among 
other things, spinal and extra spinal manipulations. Prior to January 
1, 1997, chiropractors generally billed for these services using a 
single billing code regardless of the number of regions adjusted. 
Osteopathic physicians performing manipulation treatments, by contrast, 
had been using multiple codes to bill based on the number of regions of 
the body adjusted. Beginning in January 1997, the federal government 
and private insurance companies began accepting four new codes for 
chiropractic manipulations. The new chiropractic manipulative treatment 
(``CMT'') codes reflected more detailed or precise descriptions of the 
manipulation services and allowed chiropractors, like osteopathic 
physicians, to bill based on the number of regions adjusted.
    Beginning in late 1996, shortly after the new CMT codes were 
announced, the WCA, acting through its executive director Mr. Leonard, 
orchestrated an agreement among its members to raise fees for 
chiropractic manipulation services. In late 1996 and continuing into 
early 1997, the WCA conducted training seminars on the new codes for 
members in localities throughout the state. The WCA urged chiropractors 
not to make any decisions on their fees under the new codes before 
attending one of these meetings. During the meetings, Mr. Leonard told 
the chiropractors that the new CMT codes provided them with a unique 
opportunity to increase their fees. Mr. Leonard advised members that it 
was important that the new codes for chiropractic manipulation were 
priced properly, and that the WCA's view was that proper pricing was at 
the same level that osteopathic physicians billed for spinal 
manipulation services. He provided detailed data on current osteopathic 
pricing, and encouraged chiropractors to raise their prices to the 
osteopathic levels.
    At the meetings Mr. Leonard assured members that if they all raised 
their rates, third-party payers would not reject or reduce these higher 
charges for the new codes. Under the ``UCR'' (``usual, customary, and 
reasonable rate'') system of reimbursement that was in general use in 
Wisconsin's health care industry, price increases by a significant 
number of chiropractors would raise the UCR level and thereby result in 
higher reimbursement for chiropractic services. On the other hand, if 
other members did not raise their prices, UCR levels would not rise, 
the chiropractor would not receive higher reimbursement, and he or she 
would be identified to patients as an ``outlier'' whose fees were far 
higher than other chiropractors. Each chiropractor's action in 
conformity with the WCA's pronouncement would be aided by knowledge 
that other members were taking similar action. Many members left the 
WCA local meetings with the understanding that they and others at the 
meeting would raise their prices in accordance with the WCA's request. 
After the new codes took effect,

[[Page 13389]]

Mr. Leonard surveyed member pricing in certain localities, and reported 
back to members that chiropractors in these areas had succeeded in 
raising reimbursement levels.
    As a result of these actions by the WCA and Mr. Leonard, many 
chiropractors raised their fees to the osteopathic levels. Other 
chiropractors increased their fees substantially more than they had in 
previous years. Overall, the effect of these actions was to raise the 
prices that consumers pay for chiropractic services.
    In furtherance of the WCA's efforts to raise chiropractic fees, the 
WCA and Mr. Leonard regularly provided fee surveys to the WCA's 
members. At times, these fee surveys reflected insufficiently 
aggregated data, thus effectively identifying current prices by 
individual chiropractic offices. Fee survey data were also furnished in 
connection with boycotts of managed care plans.
    In March 1997, the WCA and Mr. Leonard organized a boycott by WCA 
members of MultiPlan, a preferred provider network. At a board meeting, 
the WCA directors on Mr. Leonard's recommendation agreed to reject, and 
to encourage their fellow chiropractors to reject, MultiPlan's proposed 
contract amendments and new fee schedule. Mr. Leonard recommended that 
chiropractors demand a fee schedule reflecting 85% of market price, and 
provided survey data that showed current average charges throughout the 
state. At training seminars held in early April 1997, Mr. Leonard 
criticized MultiPlan's proposed amendments and fee schedule, encouraged 
chiropractors to discuss the contract with others in their area, and 
reminded them that if enough chiropractors rejected the contract, 
MultiPlan would be forced to renegotiate the terms. Soon thereafter 
many of the chiropractic members of the WCA submitted letters of 
termination to MultiPlan.
    Mr. Leonard routinely reviewed managed care contract offers to the 
WCA's members and circulated to the WCA's membership memoranda 
containing adverse comments about these plans' fee schedules for the 
new CMT codes. In his comments, Mr. Leonard frequently encouraged 
chiropractors to negotiate higher fees with the plans, and advised them 
to exchange all information they received with other chiropractors in 
their area. In so doing, Mr. Leonard reminded the WCA's members that 
they would be more successful in their fee negotiations with third-
party payers if the members continued to negotiate on a united front. 
In addition, Mr. Leonard, again acting in his capacity as executive 
director of the WCA, told third-party payers that they should be paying 
chiropractors the same amount that osteopaths are paid for manipulation 
services, encouraged third-party payers to agree to pay specific sums 
certain or to calculate fees in a manner proposed by the WCA, and 
called third-party payers to follow up on complaints of low 
reimbursement that he encouraged and received from individual WCA 
members.
    The WCA's member have not integrated their practices in any 
economically significant way, nor have they created any efficiencies 
that might justify this conduct. The purpose of this conduct was to 
secure higher fees and reimbursement. The WCA's actions harmed 
consumers by increasing the prices for chiropractic services and 
depriving consumers of the benefits of competition among chiropractors.

The Proposed Consent Order

    The proposed consent order is designed to prevent the illegal 
concerted action alleged in the complaint. Paragraphs II and III of the 
proposed order contain the key provisions. These two paragraphs are 
almost identical in their coverage, except that Paragraph II applies to 
the WCA and Paragraph III applies to Mr. Leonard. Paragraphs II.A and 
III.A prohibit the WCA and Mr. Leonard from fixing prices for any 
chiropractic goods or services (or, in the case of Mr. Leonard, any 
health care goods or services). The broader category including ``any 
health care goods or services'' is needed should Mr. Leonard obtain 
employment with another health care entity outside the chiropractic 
field.
    Paragraphs II.B and III.B prohibit the WCA and Mr. Leonard from 
creating, suggesting, or endorsing any proposed fees or conversion 
factors for any health care goods or services. Here, the WCA is also 
subject to the broader category of ``any health care goods or 
services'' since the allegations in the complaint include the WCA's 
endorsement of osteopathic fee schedules.
    Paragraphs II.C and III.C prohibit the WCA and Mr. Leonard from 
engaging in negotiations on behalf of any chiropractor or group of 
chiropractors (or, in the case of Mr. Leonard, any provider or group of 
providers). In addition, this paragraph prohibits them from 
orchestrating concerted refusals to deal.
    Paragraphs II.D and III.D prohibit the WCA and Mr. Leonard from 
urging or recommending that any chiropractor (or, in the case of 
Leonard, any provider) accept or not accept any term or condition of 
any participation agreement. Paragraphs II.E and III.E prohibit the WCA 
and Mr. Leonard from soliciting or communicating any chiropractor's 
(or, in the case of Leonard, any provider's) views, decisions or 
intentions concerning any participation agreement.
    Pursuant to Paragraphs II.F and III.F, the WCA and Mr. Leonard are 
prohibited from organizing or participating in any meeting or 
discussion where they expect chiropractors (providers) will discuss 
intentions concerning participation in any health plans. In addition, 
these paragraphs prohibit the WCA and Mr. Leonard from continuing any 
meeting where any person makes such a communication unless the person 
is ejected from the meeting. Finally, this paragraph requires that the 
WCA and Mr. Leonard terminate any meeting where two or more persons 
make such communications.
    Paragraphs II.G and III.G ban the WCA and Mr. Leonard from 
initiating, originating, developing, publishing, or circulating any fee 
survey for any health care goods or services for a period of two years 
after the date that the order becomes final, or until December 31, 
2001, whichever is earlier. The two-year ban on fee surveys is 
necessitated by the gross misuse of fee surveys alleged in the 
complaint. In addition, for five years thereafter, Paragraphs II.H and 
III.H prohibit the WCA and Mr. Leonard from conducting or distributing 
any fee survey unless: (1) The data collection and analysis are managed 
by a third party; (2) the raw fee survey data is retained by the third 
party and not made available to the respondents; (3) any information 
that is shared among or is available to providers is more than three 
months old; and (4) there are at least five providers reporting data 
upon which each disseminated statistic is based, no individual 
provider's data represents more than 25 percent on a weighted basis of 
that statistic, and any information disseminated is sufficiently 
aggregated that it would not allow respondents or any other recipients 
to identify the prices charged or compensation paid by any particular 
provider. These requirements are identical to the requirements found in 
the safe harbor provisions of the Statements of Antitrust Enforcement 
Policy in Health Care, Statement 5 on Providers' Collective Provision 
of Fee-Related Information to Purchasers of Health Care Services, 
issued jointly by the FTC and the Department of Justice on August 18, 
1996 (4 Trade Reg. Rep. (CCH) para. 13,153 at 20,809).
    Paragraphs II.I and III.I prohibit the WCA and Mr. Leonard from 
encouraging, advising or pressuring any

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person to engage in any action that would be prohibited if the person 
were subject to the order.
    Paragraphs II and III contain provisos allowing the WCA and Mr. 
Leonard to exercise their First Amendment petitioning rights and to 
solicit competition-restricting government action where protected under 
the Noerr-Pennington doctrine. In addition, Paragraph III contains a 
proviso allowing Mr. Leonard to engage in certain acts otherwise 
prohibited by the order providing he is acting as an agent, employee, 
or representative exclusively for a single provider or payer.
    Paragraph IV. requires that the WCA maintain copies of: (1) All 
documents distributed at meetings and seminars; (2) all fee surveys and 
a record of their distribution; and (3) all documents relating to any 
subject that is covered by any provision in the order. Paragraph V. 
requires that the WCA provide copies of the complaint and order: (1) To 
all current and future officers, directors, and members; (2) to all 
current and future agents, representatives, and employees whose 
activities are affected by the order, or who have responsibilities with 
respect to the subject matter of the order; and (3) to the third-party 
payers set forth in Appendix B to the order.
    Paragraph VI. requires that the WCA notify the Commission of any 
change in its corporate structure that may affect compliance 
obligations. Similarly, Paragraph VII. requires that Mr. Leonard notify 
the Commission of any change in his employment and would require him to 
provide copies of the complaint and consent order to any new employer 
for which his new duties and responsibilities are subject to any 
provisions in the order.
    Paragraphs VIII. and IX. consist of standard Commission reporting 
and compliance procedures. Finally, Paragraph X. contains a standard 
twenty-year ``sunset'' provision under which the terms of the order 
terminate twenty years after the date of issuance.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 00-6045 Filed 3-10-00; 8:45 am]
BILLING CODE 6750-01-M