[Federal Register Volume 78, Number 44 (Wednesday, March 6, 2013)]
[Notices]
[Pages 14547-14549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-05126]


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FEDERAL TRADE COMMISSION

[File No. 121 0098]


Praxedes E. Alverez Santiago, M.D., Daniel Perez Brisebois, M.D., 
Jorge Grillasca Palou, M.D., Rafael Garcia Nieves, M.D., Francis M. 
Vazques Roura, M.D., Angel B. Rivera Santos, M.D., Cosme D. Santos 
Torres, M.D., and Juan L. Vilaro Chardon, M.D.; Analysis of Agreement 
Containing Consent Order 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 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 2, 2013.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/prnephrologistsconsent online or on 
paper, by following the instructions in the Request for Comment part of 
the SUPPLEMENTARY INFORMATION section below. Write ``PR Nephrologists, 
File No. 121 0098'' on your comment and file your comment online at 
https://ftcpublic.commentworks.com/ftc/prneprologistsconsent by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, mail or deliver your comment to the following 
address: Federal Trade Commission, Office of the Secretary, Room H-113 
(Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Garry Gibbs (202-326-2767), FTC, 
Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 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 February 28, 2013), on the World Wide Web, 
at http://www.ftc.gov/os/actions.shtm. A paper copy can be obtained 
from the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue 
NW., Washington, DC 20580, either in person or by calling (202) 326-
2222.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before April 2, 2013. 
Write ``PR Nephrologists, File No. 1211 0098'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to 
remove individuals' home contact information from comments before 
placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which * * * is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/prnephrologistsconsent by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``PR Nephrologists, File 
No. 121 0098'' on your comment and on the envelope, and mail or deliver 
it to the following address: Federal Trade

[[Page 14548]]

Commission, Office of the Secretary, Room H-113 (Annex D), 600 
Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your 
paper comment to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before April 2, 2013. You can find more information, 
including routine uses permitted by the Privacy Act, in the 
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement containing a proposed consent order with 
Pr[aacute]xedes E. Alvarez Santiago, M.D., Daniel P[eacute]rez 
Brisebois, M.D., Jorge Grillasca Palou, M.D., Rafael Garc[iacute]a 
Nieves, M.D., Francis M. V[aacute]zquez Roura, M.D., Angel B. Rivera 
Santos, M.D., Cosme D. Santos Torres, M.D., and Juan L. Vilar[oacute] 
Chard[oacute]n, M.D. (``Respondents''). The agreement settles charges 
that Respondents violated Section 5 of the Federal Trade Commission 
Act, as amended, 15 U.S.C. 45, by jointly negotiating contracts to fix 
the prices for their services and by collectively refusing to deal with 
a third-party payer in Puerto Rico.
    The proposed consent order has been placed on the public record for 
30 days to receive comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will review the agreement and the comments 
received, and will decide whether it should withdraw from the agreement 
or make the proposed consent order final.
    The purpose of this analysis is to facilitate public comment on the 
proposed consent order. The analysis is not intended to constitute an 
official interpretation of the agreement and proposed consent order, or 
to modify their terms in any way. Further, the proposed consent order 
has been entered into for settlement purposes only and does not 
constitute an admission by Respondents that they violated the law or 
that the facts alleged in the proposed complaint (other than 
jurisdictional facts) are true.

The Proposed Complaint

    Respondents are eight independent physicians in southwestern Puerto 
Rico who provide nephrology services for commercial, Medicare, and 
Medicaid patients through contracts with various payers. Respondents 
constitute almost 90 percent of the nephrologists in the southwestern 
region of Puerto Rico.
    The Medicaid program in Puerto Rico, Mi Salud, is administered by 
Administraci[oacute]n de Seguros de Salud (``ASES''), a public 
corporation that is charged with ensuring that the more than 1.5 
million indigent residents of Puerto Rico have access to a full 
complement of medical services. ASES determines the benefits Mi Salud 
members will receive. ASES contracts with two health plans, Humana 
Health Plans of Puerto Rico, Inc. (``Humana'') and Triple-S, to 
facilitate the provision of medical services to Mi Salud members and 
payments to participating providers. Humana administers the Mi Salud 
program in the southwestern region of Puerto Rico, where the 
Respondents do business.
    The Mi Salud reimbursement program was modified in October 2010 for 
Mi Salud members who are also covered by Medicare (``dual eligibles''). 
Under the previous program Medicare paid 80 percent of its established 
rate, and payers administering the Mi Salud program paid the remaining 
20 percent, known as the coordination of benefits amount (``20 percent 
COB''). After October 2010, providers no longer received a coordination 
of benefits amount for dual eligibles, except in rare circumstances. As 
a result of this change, providers' reimbursements decreased for dual 
eligibles under the Mi Salud program.
    The proposed complaint alleges that Respondents collectively (1) 
negotiated in an attempt to extract higher reimbursement rates by 
fixing the prices upon which Respondents would contract with Humana and 
(2) terminated their contracts with Humana and refused to treat Humana 
patients enrolled in the Mi Salud program because Humana would not 
acquiesce to Respondents' price-related demands.
    The joint price negotiations and collective refusals to deal 
commenced in late 2011. On October 28, 2011, Dr. Jorge Grillasca sent 
an email to Humana stating that Humana's failure to reimburse the full 
20 percent COB would force him to discontinue his treatment of Humana's 
Mi Salud members and create a dangerous situation for these patients. 
He requested that Humana ``hold an urgent meeting with me and other 
colleagues that share the same concern.'' He copied all of the other 
Respondents on this email.
    The meeting occurred on December 8, 2011, when two of the 
Respondents, Dr. Angel Rivera Santos and Dr. Daniel Perez, met with 
Humana representatives to discuss the 20 percent COB. During that 
meeting, Dr. Daniel Perez presented to Humana a fee schedule that 
proposed higher reimbursement rates. The next day Dr. Rivera Santos 
wrote an email to Humana stating, ``I understand as well that I have 
the right to receive the 20% that had been denied. It will depend on 
these issues if I decide to continue my professional relationship with 
Humana Mi Salud. Also remember that I am waiting for your response 
related to the newly proposed rates that were handed to you yesterday 
by my colleague Dr. Daniel Perez.'' Dr. Rivera Santos copied all the 
other Respondents on this email.
    The following February 2012, ASES and Humana met with Respondents 
to discuss the 20 percent COB rule. At the conclusion of the meeting, 
Dr. Grillasca presented to Humana a fee schedule proposing increased 
rates. On February 28, 2012, Dr. Grillasca stated in an email to Humana 
that the payer had until March 1, 2012, to respond to the Respondents' 
proposed fee schedule. He copied the other Respondents on this email. 
When Humana did not respond by the March 1 deadline, all eight 
Respondents terminated their Mi Salud service agreements with Humana 
with virtually identical letters.
    Respondents immediately ceased providing nephrology services to 
Humana Mi Salud patients despite having a legal obligation under their 
contract with Humana to continue providing services for 120 days after 
giving written notice of termination. The termination of services had 
significant and real consequences to patients. In one instance, a 
patient with critical renal failure arrived at an area hospital in need 
of immediate care and likely long-term dialysis treatment. All of the 
nephrologists refused to treat the patient, whose condition worsened 
and who was later transferred to a hospital 74 miles away in San Juan. 
Dr. Grillasca told hospital personnel that the nephrologists were not 
taking Mi Salud patients due to a disagreement with Humana over rates. 
On the same day, Respondents refused to treat another Humana Mi Salud 
patient admitted to another area hospital with a renal illness. The 
patient's family objected to the patient's transfer to a hospital with 
nephrology services that was 67 miles away. Respondents eventually 
began treating patients again only after being

[[Page 14549]]

ordered to do so by Puerto Rico's Office of the Health Advocate.
    ASES ultimately agreed to Respondents' demand for higher 
reimbursement rates. ASES believed it had no choice but to acquiesce to 
Respondents' demands because of its concerns over access to nephrology 
services for Mi Salud patients. On June 13, 2012, ASES abandoned the 
new reimbursement formula and reinstated the 20 percent COB. The 
requirement that payers reimburse providers the full 20 percent COB, 
retroactive to March 16, 2012, is estimated to cost ASES and the Mi 
Salud program an additional $4 million to $6 million annually. Thus, 
the denial of nephrology services and the demands for higher 
reimbursement rates caused substantial harm to the consumers of Puerto 
Rico.
    Finally, the proposed complaint alleges that Respondents' actions 
were a naked agreement to fix prices and a collective refusal to deal, 
not related to any efficiency-enhancing justification or any efforts at 
clinical or financial integration. Respondents, at all times relevant 
to the proposed complaint, maintained separate, independent nephrology 
practices and made no attempt to share the financial risk in the 
provision of nephrology services or to clinically integrate the 
delivery of care to patients, which might justify the otherwise illegal 
joint activity.

The Proposed Consent Order

    The proposed consent order is designed to prevent the continuance 
and recurrence of the illegal conduct alleged in the proposed 
complaint, while not prohibiting the Respondents to engage in 
legitimate joint conduct in the future, if they so choose.
    Paragraph II of the proposed consent order prevents Respondents 
from continuing the challenged conduct. In particular, Paragraph II.A 
prevents Respondents from entering into or participating in agreements: 
(1) To negotiate on behalf of another physician with any payer, (2) to 
refuse to deal, or threaten to refuse to deal with any payer, or (3) 
regarding any term, condition, or requirement upon which another 
physician deals, or is willing to deal, with any payer, including, but 
not limited to, price terms.
    The other parts of Paragraph II reinforce these general 
prohibitions. Paragraph II.B prohibits Respondents from exchanging 
information with another physician concerning whether and on what terms 
that other physician is willing to contract with a payer. Paragraph 
II.C prevents Respondents from entering into agreements to withhold 
services from any person. Paragraph II.D bars Respondents from 
exchanging information among physicians concerning any physician's 
willingness to offer or withhold services from any person. Paragraph 
II.E prohibits attempts to engage in the actions precluded by 
Paragraphs II.A, II.B, II.C, or II.D. Paragraph II.F proscribes 
encouraging or attempting to induce any action that would be prohibited 
by Paragraph II. Nothing in Paragraph II prohibits any agreement or 
conduct among Respondents that is reasonably necessary to a Qualified 
Arrangement.
    Paragraph III requires Respondents to provide the Commission with 
notice and certain information before entering into a Qualified 
Arrangement. Paragraph III.A requires Respondents to notify the 
Commission 60 days prior to entering into any Qualified Arrangement. 
Paragraph III.B requires Respondents to provide information about the 
nature and effects of the proposed agreement as part of the Paragraph 
III.A notification. Paragraph III.C allows the Commission to make a 
written request for additional information within 60 days, which then 
prevents the participating Respondents from entering into the proposed 
agreement until 30 days after substantially complying with the request 
for additional information. Paragraphs III.D through F state that 
certain actions with respect to a proposed Qualified Arrangement should 
not be construed as a determination by the Commission that the action 
violates the law, is approved, or violates this order.
    Paragraph IV is similarly designed to prevent the challenged 
conduct from recurring by requiring Respondents to send copies of the 
complaint and consent order to those impacted by its terms. Paragraph 
IV.A requires each Respondent to send a copy of the complaint and 
consent order to every physician, officer, manager, and staff member in 
each Respondent's medical practice group at any time since January 1, 
2010. Paragraph IV.A also requires each Respondent to send a copy of 
the complaint and consent order to every payer whom Respondent had 
contacted regarding contracting for physician services at any time 
since January 1, 2010. Paragraph IV.B carries the provisions in 
Paragraph IV.A forward for three years from the date of the order.
    Paragraphs V, VI, and VII impose various obligations on Respondents 
to report or to provide access to information to the Commission to 
facilitate Respondents' compliance with the consent order. Finally, 
Paragraph VIII provides that the proposed consent order will expire 20 
years from the date it is issued.

    By direction of the Commission.,

    Chairman Leibowitz not participating.
Donald S. Clark,
Secretary.
[FR Doc. 2013-05126 Filed 3-5-13; 8:45 am]
BILLING CODE 6750-01-P