[Federal Register Volume 82, Number 18 (Monday, January 30, 2017)]
[Notices]
[Pages 8752-8755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01899]


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FEDERAL TRADE COMMISSION

[File No. 141 0194]


Cooperativa de M[eacute]dicos Oftalm[oacute]logos de Puerto Rico 
(OftaCoop); 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 methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the 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 February 21, 2017.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/oftacoopconsent online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of 
Cooperativa de Medicos Oftalmologos de Puerto Rico, File No. 1410194--
Consent Agreement'' on your comment and file your comment online at 
https://

[[Page 8753]]

ftcpublic.commentworks.com/ftc/oftacoopconsent by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, write ``In the Matter of Cooperativa de Medicos Oftalmologos 
de Puerto Rico, File No. 1410194--Consent Agreement'' on your comment 
and on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, 
Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Synda Mark (202-326-2353), 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 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 January 19, 2017), on the World Wide Web, 
at http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before February 21, 
2017. Write ``In the Matter of Cooperativa de Medicos Oftalmologos de 
Puerto Rico, File No. 1410194--Consent Agreement'' 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/oftacoopconsent 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 ``In the Matter of 
Cooperativa de Medicos Oftalmologos de Puerto Rico, File No. 1410194--
Consent Agreement'' on your comment and on the envelope, and mail your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 
20024. 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 February 21, 2017. 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

I. Overview

    The Federal Trade Commission (Commission), has accepted, subject to 
final approval, an agreement containing a proposed consent order with 
the Cooperativa de M[eacute]dicos Oftalm[oacute]logos de Puerto Rico 
(Respondent or OftaCoop). The agreement settles charges that OftaCoop 
violated Section 5 of the Federal Trade Commission Act, as amended, 15 
U.S.C. 45, by orchestrating a concerted refusal to deal by 
ophthalmologists in Puerto Rico to preclude a third-party payor and its 
network administrator from implementing a cost-savings program to 
manage ophthalmology services and reduce reimbursement rates.
    The proposed consent order has been placed on the public record for 
30 days to solicit comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will again review the proposed consent order along 
with the comments received, and decide whether it should withdraw from 
the consent agreement, modify it, or make final the proposed consent 
order.
    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 proposed consent order or to modify its 
terms in any way. Further, the proposed consent order has been entered 
into for settlement purposes only and does not constitute an admission 
by Respondent that it violated the law or that the facts alleged in the 
Complaint (other than jurisdictional facts) are true.

II. The Complaint

    OftaCoop is a healthcare cooperative with about 100 
ophthalmologists organized under the laws of the

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Commonwealth of Puerto Rico. The proposed complaint charges that 
OftaCoop facilitated an agreement among competing ophthalmologists to 
refuse to deal with MCS Advantage, Inc. (MCS), a payor, and Eye 
Management of Puerto Rico (Eye Management), MCS's network 
administrator. The allegations of the proposed complaint are summarized 
below.
    MCS provides healthcare coverage to enrollees of its Medicare 
Advantage plans pursuant to a contract with Medicare. Medicare pays MCS 
a premium; in exchange, MCS arranges and pays for healthcare services 
for its enrollees. To participate in the Medicare Advantage program, 
MCS must offer a provider network with a sufficient number of 
physicians to comply with the program's network adequacy requirement 
designed to ensure enrollees have adequate access to healthcare 
services. MCS sought to lower its costs after Medicare reduced the 
premiums it was paying to MCS.
    In April 2014, MCS asked Eye Management to create and manage a 
network of ophthalmologists in Puerto Rico to help lower costs and 
better manage ophthalmology services provided to its Medicare Advantage 
enrollees. Eye Management would administer ophthalmology services and 
benefits provided to MCS enrollees, including credentialing, 
utilization review, claims processing, and other management services. 
Under the arrangement, Eye Management would enter into contracts 
directly with each ophthalmologist to replace MCS's existing contracts 
with each ophthalmologist. In early June 2014, Eye Management sent a 
proposed contract to every ophthalmologist contracted with MCS at the 
time. These contracts offered payments at rates that were about 10% 
lower, on average, than the rates under the existing contracts between 
MCS and each ophthalmologist.
    OftaCoop convened a meeting on June 14, 2014 with OftaCoop members 
and non-member ophthalmologists to discuss their dissatisfaction with 
Eye Management. The attendees agreed not to sign a new contract with 
Eye Management in order to prevent Eye Management from creating a 
network on behalf of MCS. After the meeting, OftaCoop's former 
Secretary of the Board of Directors, with help from OftaCoop's 
president, sent an email to OftaCoop member and non-member 
ophthalmologists with the subject line ``DO NOT SIGN THE MCS/EYE 
MANAGEMENT AGREEMENT.'' The email was signed ``Board of Directors 
OFTACOOP'' and sent from OftaCoop's official email account. The email 
urged the ophthalmologists not to sign the contract with Eye Management 
so they could collectively negotiate with payors through OftaCoop.
    Eye Management's medical director was one of the recipients of the 
email. In response to the email, Eye Management's counsel sent OftaCoop 
a cease-and-desist letter on June 19, 2014, asking OftaCoop to stop 
interfering with negotiations between Eye Management and individual 
ophthalmologists. The letter also notified OftaCoop that any agreement 
among competing ophthalmologists to jointly refuse to contract with Eye 
Management was illegal under the antitrust laws.
    OftaCoop next met on June 22, 2014. The stated purpose of that 
meeting, according to the June 14, 2014 email, was ``to turn this 
around and for us to trample over MCS.'' At the meeting, OftaCoop's 
president told the attendees they should make their own decision about 
payor contracting. Notwithstanding Eye Management's cease-and-desist 
letter, the former Secretary of the Board told the meeting attendees 
that they had to be united against Eye Management.
    The collective refusal to deal among the ophthalmologists prevented 
Eye Management from creating a lower-cost network. Few ophthalmologists 
joined the Eye Management network. In early August 2014, Eye Management 
informed MCS of its inability to form a viable network of 
ophthalmologists. MCS directed Eye Management to suspend further 
efforts to develop a network.
    MCS next tried to lower costs through its direct contracts with the 
ophthalmologists. In early August 2014, MCS offered to continue 
contracting directly with the ophthalmologists at rates about 10% below 
rates under its existing contracts with the ophthalmologists. Just as 
they had rejected Eye Management's proposed contracts, many 
ophthalmologists refused to accept MCS's offer and cancelled, or 
threatened to cancel, their existing contracts with MCS. The contract 
cancellations jeopardized MCS's ability to meet network adequacy 
requirements for its Medicare Advantage enrollees. It also threatened 
to imperil patient care: MCS received hundreds of phone calls from its 
enrollees complaining that ophthalmologists were not offering 
appointments or cancelling previously scheduled surgeries. MCS had no 
choice but to abandon its plan to lower rates and instead continued 
paying ophthalmologists the higher rates to retain its network.
    Finally, the complaint alleges that OftaCoop has not undertaken any 
activities to create any integration among OftaCoop members in their 
delivery of ophthalmology services and thus cannot justify the alleged 
conduct.

III. The Proposed Consent Order

    The proposed consent order is designed to prevent recurrence of the 
illegal conduct alleged in the complaint. The key provisions are aimed 
at preventing OftaCoop from using concerted refusals to deal or other 
coercive tactics to extract favorable contract terms from payors. The 
proposed consent order also takes into account a change in Puerto Rico 
law that authorizes healthcare cooperatives to jointly negotiate with 
payors. Therefore, the proposed consent order does not prohibit 
OftaCoop from jointly contracting with payors.

A. Proposed Consent Order Provisions

    Paragraph II.A bars OftaCoop from organizing or implementing 
agreements to refuse to deal, or to threaten to refuse to deal, with a 
payor over contract terms, as well as agreements not to deal 
individually with payors, or to deal only through OftaCoop. Paragraph 
II.B prohibits OftaCoop from submitting for state approval any payor 
contract that it negotiated using acts of coercion, intimidation, 
boycott, or concerted refusal to deal.
    The remaining portions of Paragraph II prohibit conduct that would 
facilitate a violation of Paragraph II.A. Paragraph II.C bars 
information exchanges to further conduct that violates the core 
prohibitions of Paragraph II. Paragraphs II.D and II.E. ban attempts 
and encouragement of such violations.
    Paragraph III.A requires OftaCoop to send a copy of the complaint 
and consent order to its members, officers, directors, managers, and 
employees. Paragraph III.B contains notification provisions relating to 
future contact with its members, officers, directors, managers and 
employees. For five years after the date on which the consent order is 
issued, OftaCoop is required to distribute a copy of the consent order 
and complaint to each member who begins participating in OftaCoop and 
each person who becomes an officer director, manager, or employee. 
Paragraph III.B also requires OftaCoop to publish a copy of the consent 
order and complaint, annually for five years, on its Web site, if any, 
or any official publication it sends to its members.
    Paragraphs IV, V, and VI impose various obligations on OftaCoop to 
report or provide access to information to the Commission to facilitate 
monitoring of compliance with the consent order.

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    Finally, paragraph VII provides that the consent order will expire 
in 20 years.

B. Impact of New Puerto Rico Law on the Proposed Consent Order and 
Inclusion of a Proviso

    During the investigation, Puerto Rico passed a new law (Act 228 of 
December 15, 2015) permitting healthcare cooperatives such as OftaCoop 
to jointly negotiate contracts with payors. Under this new law, 
healthcare cooperatives must file their payor agreements with the 
Puerto Rico Public Corporation for the Supervision and Insurance of 
Cooperatives (COSSEC). A committee whose members are not competitors in 
the market will oversee the negotiations, and must approve or 
disapprove each agreement.
    Puerto Rico has neither issued any regulations nor do we have any 
record to evaluate how Puerto Rico will supervise negotiations. 
Therefore, the Commission is unable to assess to whether Act 228 
complies with state action requirements.\2\ Although it is too early to 
assess Puerto Rico's implementation of the new law, the Commission 
believes the circumstances here make it appropriate to defer to Puerto 
Rico's expressed intention to actively supervise joint negotiations 
between healthcare cooperatives and payors. Puerto Rico officials have 
only been recently granted that authority, and it is appropriate to 
allow them an opportunity to utilize that authority. As a result, the 
proposed consent order does not bar collective price negotiations. This 
is consistent with the consent order in another matter involving 
healthcare providers where state officials had authority to actively 
supervise private conduct but had not exercised it.\3\
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    \2\ The state action doctrine shields certain anticompetitive 
conduct by the states from federal antitrust scrutiny. See Parker v. 
Brown, 317 U.S. 341 (1943).
    \3\ See Minnesota Rural Health Cooperative, C-4311 (Jan. 4, 
2011) (consent order, in settling charges that a group of doctors 
and hospitals used coercive tactics in negotiations with payors, 
prohibited using coercion in negotiations, but did not bar joint 
negotiations), available at https://www.ftc.gov/news-events/press-releases/2010/06/minnesota-health-care-provider-group-settles-ftc-price-fixing.
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    In light of Act 228, the order also includes a proviso designed to 
clarify the scope of the prohibitions in Paragraph II. First, it 
provides that the provisions of Paragraph II do not prohibit OftaCoop, 
in exercising its business judgment, from rejecting a contract on 
behalf of its members, so long as there is no agreement between 
OftaCoop and any of its members that the member will refuse to deal 
individually (or will deal only through OftaCoop). Second, the proposed 
consent order does not prevent OftaCoop from exchanging information 
when necessary to conduct joint payor contract negotiations on behalf 
of its members. Such information would not, however, ordinarily include 
whether an individual member is participating in a particular contract 
or the terms on which it is negotiating with a payor independently of 
OftaCoop.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2017-01899 Filed 1-27-17; 8:45 am]
 BILLING CODE 6750-01-P