Tahoe physicians’ group responds to federal settlement | SierraSun.com
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Tahoe physicians’ group responds to federal settlement

JOHN A. BAYLESS, Sierra Sun

Although the Tahoe Independent Physicians Association signed a settlement to end a Federal Trade Commission complaint against it, the group did not let the public comment period on the matter slip by without injecting its own opinion of the FTC’s ruling.

Tahoe IPA president Chris Richards said the association signed the FTC order because it had no choice, but wanted to let its opinion be heard during the public comment period on the settlement.

“We are physicians,” Richards stated in the IPA’s public comment to the FTC. “We are not health-care attorneys or managed care executives. We do not have the resources or the time to challenge the federal government on these issues.”

He said the FTC’s order is an attempt to protect the interests of an insurance company and that the IPA had complied with the spirit of the anti-trust law.

“Unfortunately, the order will result in our community losing the benefits of local health-care system development,” he said. “I am convinced that there is no benefit in this order for any party whatsoever. I think that it is clearly the wrong thing to do for all.”

The IPA and the FTC agreed last winter to the order which limits the IPA’s negotiating powers and required individual IPA members to attempt in good faith to contract with Blue Shield. The consent decree followed a relatively brief investigation by the FTC, in response to boycott allegations by an insurance company.

Blue Shield of California apparently prompted the investigation with communications to the FTC earlier this year, in which it stated Tahoe Health System’s attempt to negotiate with the insurance companies on behalf of the physicians and both area hospitals was tantamount to a boycott.

Tahoe Health Systems is a joint venture between Tahoe Forest Hospital, Barton Memorial Hospital and the IPA. In a letter to the IPA and Tahoe Health Systems, Blue Shield indicated its intent to take the matter up with the FTC, and the investigation began shortly thereafter.

Many physicians in the Truckee-North Tahoe area had dropped out of Blue Shield’s preferred provider network, citing low reimbursement as the cause. Some specialists have reported reimbursement as low as 38 percent of the amount billed.

The FTC, after investigating the matter for the past few months, concluded that there was evidence of an organized boycott – an allegation which the IPA says is untrue.

“Blue Shield of California makes a spurious complaint,” Richards stated. “Blue Shield of California had many opportunities to negotiate contractual agreements with individual physicians as well as with the entire IPA physician panel. Then, as now, their refusal to enter into any negotiations on fees is solely responsible for the attrition they find in their provider panel. This is easily documented. There has never been a boycott of Blue Shield of California by local physicians.” The IPA requested that the portion of the order pertaining to Blue Shield be deleted.

According to the terms of the order:

– The settlement does not constitute an admission that a law has been violated.

– The Tahoe IPA can no longer negotiate on behalf of its member physicians unless the plan is a qualified risk-sharing arrangement or a qualified clinically integrated joint arrangement.

– The Tahoe IPA can facilitate the exchange of information between members and plans.

– The Tahoe IPA can participate with the Joint Venture in the development of the Community Health Plan (HealthPro).

– Members of the IPA who have terminated participation with Blue Shield were required, in good faith, to re-establish participation with Blue Shield for a period of six months or be dropped from participation in the Tahoe IPA. That period is now past.

– The Tahoe IPA shall terminate all payer agreements that don’t comply with the qualified risk-sharing or clinically integration provision at the termination or renewal date or at the request of the payor.

“FTC’s order is too restrictive on the activities of the Tahoe IPA in not allowing it to negotiate on behalf of payors in matters not related to price,” Richards said. “There are wide benefits to the community and to payors by allowing the IPA to work through the language of contractual agreements on behalf of providers. This ensures a better contractual relationship that has a better chance of succeeding in the long term and yet still avoids any accusation of price fixing.”

The IPA took issue with a number of other statements the FTC made in its decree.

“FTC investigators defined the local geographic market service area inaccurately,” Richards said. “Our market conditions are largely formed by the adjacent larger cities of Reno, Carson City and Sacramento. Community members, employers, insurance companies and HMOs regularly utilize these adjacent urban areas for health-care services. There is significant out migration of our local population to these other areas. Insureds are directed to seek health-care services in these cities rather than in our local communities due to contractual arrangements.”

Richards said many North Lake Tahoe and Truckee residents are employed in Reno and seek health-care services there, and that the same holds true for residents of South Lake Tahoe, who access Carson City, Gardnerville and Minden for health care. “Investigators chose to overlook these facts,” he said.

He also said the IPA was active in bringing managed care to the area, and did not try to delay it in the manner alleged by the FTC.

“Far from conspiring to delay the entry of managed care into our communities, the IPA members actively cooperated to bring many new managed care features, ones which did not exist prior to the IPA’s strategic development,” Richards said. “Physicians volunteered countless hours of non-reimbursed labor and contracted for deeper discounts than they had ever contemplated in the past. In fact, introducing managed care to the community was the original purpose in forming the IPA.”

He said the IPA’s first official act was to enter into a Joint Venture with Tahoe Forest Hospital to develop a community health plan, which sought proposals from HMOs and insurers for partnerships to address community needs.

“Spin-off benefits that have accrued to the community over the years of effort include a much more knowledgeable medical community able to respond to and address managed care issues, a great deal more cooperation among medical providers in their ability to coordinate medical care in and out of hospital, many new insurers represented in the community with access to virtually all providers via network and individual contracts, new quality incentives and new utilization management incentives,” Richards said.

The IPA still has managed care contracts with Tahoe-Truckee Unified School District and Tahoe Forest Hospital employees, both of which are working well, Richards said. “The school is very happy with what we provide,” he said. “We saved them a lot of money.”

In the order, the FTC stated that the Tahoe IPA’s system did not have a sufficient degree of clinical integration – meaning that all specialties were not linked economically.

“Asking a rural provider panel to appear to be like an urban multispecialty medical group is neither productive nor beneficial to the community,” Richards said. He said the Tahoe IPA approached clinical integration differently, with providers organized to create protocols for most often utilized diagnoses.


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