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Advisory Opinion on FTC’s Position on Multiprovider Network Joint Ventures

The Federal Trade Commission (the “FTC”) issued an Advisory Opinion dated February 13, 2013 (the “Opinion“) to Norman Physician Hospital Organization (“Norman PHO“). The Opinion was issued in response to Norman PHO’s inquiry regarding whether the FTC would recommend challenging an arrangement (the “Arrangement“) in which a multiprovider network joint venture seeks to create a “clinically integrated” network and then engage in joint contracting with third-party payers on behalf of its participating physicians and hospitals (collectively, the “Participating Providers“).

The FTC analyzed the Arrangement pursuant to the federal antitrust laws and case law precedent pertaining to multiprovider network joint ventures. The FTC concluded that the Arrangement qualified for rule of reason analysis, because the Arrangement proposed to require its Participating Providers to integrate their clinical services in a manner that appears to create the potential for significant efficiencies that benefit patients and payers, and because the Participating Providers’ pricing agreements are reasonably necessary and subordinate to their integrative activities. The FTC found under the rule of reason that the Arrangement’s procompetitive efficiencies in the provision of physician services were likely to outweigh any anticompetitive effects.

In concluding that the Arrangement’s provision of physician services does not violate the antitrust laws, the FTC cited the following program elements, which, notably, are very similar to the program elements of other clinically integrated networks that the FTC has addressed in favorable advisory opinions:

  1. The Arrangement has developed a common electronic platform that will ensure exchange of all relevant patient data between the Participating Providers, facilitate communication between the Participating Providers, and foster a high degree of transparency and visibility into the Participating Providers’ actual practice patterns and accomplishments.
  2. The Arrangement proposes to develop, implement, and enforce compliance with clinical practice guidelines for as many as 50 disease-specific conditions.
  3. The Arrangement proposes to enforce compliance with clinical practice guidelines by employing corrective actions such as physician-to-physician mentoring and other counseling and educational activities, in addition to financial withholds or penalties and expulsion from the network.
  4. The Arrangement will require the Participating Providers to make meaningful contributions, including investments of human capital, time, and money, to the development of the infrastructure, capabilities, and mechanisms necessary to collectively achieve network goals.
  5. The Arrangement has a diverse composition of Participating Providers?including 280 primary care physicians and specialists in 38 areas?that enables the Participating Providers to coordinate care in a meaningful manner.
  6. The Arrangement proposes to maximize in-network referrals by requiring all Participating Providers to participate in any contract between the Arrangement and a payer.
  7. The Arrangement is non-exclusive and allows the Participating Providers to independently contract with any payer that chooses not to contract with the Arrangement.
  8. The Arrangement will provide appropriate antitrust training to its administrators and the Participating Providers, and will implement mechanisms to limit opportunities for anticompetitive “spillover effects” or other unlawful coordination among the Participating Providers.
  9. The Arrangement maintains that joint contracting is necessary to establish and maintain a consistent physician panel of like-minded physicians who have a shared commitment to participating in all aspects of the Arrangement.

The FTC identified the non-exclusivity of the Arrangement and the safeguards against “spillover effects,” discussed in item numbers 7 and 8 above, to be particularly important.

Finally, the FTC concluded that the Arrangement’s proposed new operations do not include any vertical arrangements that restrict providers in one market from dealing with non-network providers that compete in a different market. The FTC noted that the Arrangement has represented that it will not limit the incentive or ability of the Participating Providers to participate in other network joint ventures or to contract directly with payers that do not wish to do business with the Arrangement (or vice versa).

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