On September 30, the Federal Commerce Fee (FTC) filed a grievance and proposed judgment in U.S. District Courtroom for the District of Columbia in opposition to San Juan IPA, Inc. (San Juan) for allegedly working an illegal “messenger mannequin” in violation of a previous FTC order. The FTC’s motion in opposition to San Juan serves as a reminder that the FTC continues to deal with antitrust points in well being care and that supplier teams ought to guarantee their contracting practices and collaborations adjust to the antitrust legal guidelines.
The FTC’s September grievance in opposition to San Juan (the 2022 Criticism) originates from a prior grievance (the 2005 Criticism) and consent settlement entered in 2005 between the FTC and San Juan. San Juan is an impartial apply affiliation with roughly 450 supplier members within the northwestern space round Farmington, New Mexico. The 2005 Criticism had alleged that San Juan didn’t interact in a authorized messenger mannequin with its collaborating physicians. Particularly, the FTC accused San Juan of orchestrating and implementing agreements amongst its doctor members to repair costs and different phrases on which they’d take care of payors and refusing to take care of such payors besides on collectively decided phrases. Underneath a lawful messenger mannequin, the community entity doesn’t negotiate on behalf of its member suppliers however as a substitute acts as a mere “messenger” that conveys presents and responses between every potential payor and supplier. The Division of Justice and FTC warn of their Statements of Antitrust Enforcement Coverage in Well being Care that suppliers should train warning when utilizing a messenger mannequin in order that the messenger isn’t used as an agent to facilitate illegal collusive exercise.
The FTC and San Juan settled the 2005 Criticism. Underneath the Choice and Order proposed within the consent settlement and entered by the FTC (the 2005 Order), San Juan was ordered to stop and desist from coming into or collaborating in any settlement: to barter on behalf of any doctor with any payor; to deal, refuse to deal, or threaten to refuse to take care of any payor; to not deal individually with any payor or solely by San Juan; or that included any time period, situation, or requirement upon which any doctor offers with any payor.
Seventeen years later, the FTC continues to police how impartial doctor associations (IPA) could use messenger fashions. The 2022 Criticism alleges that, beginning in 2014, San Juan “refused to deal or threatened to refuse to take care of a payor, negotiated or tried to barter price-related phrases moderately than depart such phrases for the payor to barter individually with every of San Juan’s members, and engaged in efforts to have its members take care of a payor solely by the IPA and inspired them to take action.” The FTC particulars alleged situations of San Juan violating the phrases of the 2005 Order with payors in 2014 and 2017, together with when San Juan allegedly threatened to terminate a payor on behalf of all suppliers when the payor had not accomplished negotiations with some suppliers and individually tried to barter a provision {that a} payor solely take care of a doctor member by San Juan. The 2022 Criticism alleges that San Juan’s conduct resulted in greater costs for medical companies for shoppers.
The 2022 Stipulated Ultimate Judgment and Order (the 2022 Order) accommodates broad reduction. Particularly, the 2022 Order imposes a civil penalty for $263,000 in opposition to San Juan and requires San Juan to (i) file a report with the FTC detailing whether or not and the way San Juan intends to function as a messenger with payors sooner or later and offering particular details about the association; (ii) present a duplicate of recent payor contracts with an outline and supporting paperwork of how San Juan complied with the 2022 Order through the payor negotiation; (iii) retain copies of all written communications with any payor or third social gathering and all inner memoranda and reviews regarding the negotiation of any payor contract for 5 years and supply copies upon FTC request; (iv) ship a duplicate of the 2022 Order and 2022 Criticism to San Juan members and every payor that executed a contract with San Juan for the availability of doctor companies since January 1, 2018 and proceed to take action for 5 years; and (v) conform to terminate with out penalty or cost a preexisting contract with a payor for the availability of doctor companies after the payor receives copies of 2022 Order and 2022 Criticism and requests to take action. The 2022 Order additionally reopens the 2005 Order to change and prolong the termination date to June 30, 2030.
By revisiting a matter that settled over seventeen years in the past, the FTC is signaling its continued curiosity in healthcare supplier collaborations. For San Juan, the 2022 Order now topics it and its members to broad phrases which will have long-term penalties for its enterprise and payor contracts. Because of this, suppliers ought to proceed to be diligent in how they type and function collaborations which will contain precise or potential rivals.
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