us-ftc-advisory-opinions-6eef8c35030d57b1ae71ecf3c0a219dc•TriState Health Partners, Inc.
TriState Health Partners, Inc.
us-ftc-advisory-opinions-6eef8c35030d57b1ae71ecf3c0a219dcTriState Health Partners, Inc.Guidance
The Federal Trade Commission and the Department of Justice (“the Agencies”) first discussed “clinical 1 integration” among health care providers in their joint Statements of Antitrust Enforcement Policy in Health Care (August 1996), 4 Trade Reg. Rep. (CCH) ¶ 13,153 (hereinafter referred to as “Health Care Statements”), available at http://www.ftc.gov/bc/healthcare/industryguide/policy/index.htm. See also Improving Health Care: A Dose of Competition, A Report by the Federal Trade Commission and the Department of Justice (July 2004) (available at http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf ) at Ch. 2, pp. 36-41. UN ITED STATES OF AM ERICA FEDERAL TRADE COMMISSION W ASH IN GTO N , D .C. 20580 Bureau of Competition Health Care Division April 13, 2009 Christi J. Braun, Esquire Ober, Kaler, Grimes & Shriver 1401 H Street, N.W., Suite 500 Washington, D.C. 20005-3324 Re: TriState Health Partners, Inc. Advisory Opinion Dear Ms. Braun: This letter responds to your request for an advisory opinion on behalf of TriState Health Partners, Inc., a physician-hospital organization based in Hagerstown, Maryland. TriState proposes to “clinically integrate” its members’ provision of health care services, and to contract jointly with health plans and other payers on a fee-for-service basis on behalf of its members to provide services to plan beneficiaries.1 As is discussed in detail below, it appears that, if implemented as you have described, TriState’s proposed program would be a bona fide effort to create a legitimate joint venture among its physician and hospital participants that has the potential to achieve significant efficiencies in the provision of medical and other health care services that could benefit consumers. After evaluating the proposal, we have concluded that, if implemented as you have described, we would not recommend that the Commission challenge the program. This opinion rests on three central conclusions: ∑ TriState’s proposed program, while still in the early stages of development in some respects, appears to have the potential to create substantial integration among its participants, with the potential to produce significant efficiencies, including both improved quality and more cost-effective care. ∑ Joint contracting with payers on behalf of its competing physician members appears to be subordinate and reasonably related to TriState’s plan to integrate its members’ provision of services to deliver coordinated care by a group of providers committed to the program,
Letter to Christi J. Braun April 13, 2009 Page 2 This advisory opinion letter is based on the information that you have provided to us on behalf of TriState, 2 plus some additional information provided by other parties. W e have not conducted an independent investigation to confirm, or supplement, the information that has been provided to us. TriState is governed by a board of directors that includes five representatives of its hospital member, and eight 3 physician member representatives, including four primary care physicians, two surgeons, and two medical specialists, one of whom must be a hospital-based practitioner. Under TriState’s bylaws, an act to be taken by the board requires that each class of board members have a 4 quorum (i.e., a majority of the board members representing that class of TriState members) present, and requires approval by a majority of those present for each class. TriState’s operations are managed by an administrative staff of eight. TriState’s member physicians include primary care physicians (identified as including pediatricians, family 5 practitioners, general practitioners, and internists, excluding those practicing in internal medicine sub-specialties), specialty care physicians, hospital-based physicians, and oral surgeons, all of whom are licensed to practice in Maryland, as well as medical group practices whose individual physician members meet that requirement. (continued...) and reasonably necessary to effectively implement the proposed program and achieve its potential efficiency benefits. Accordingly, TriState’s collective negotiation of contracts with payers in connection with the proposed program, including the prices to be paid for the services of the physician participants, should be evaluated under the antitrust rule of reason. ∑ While TriState’s physician members as a group, and TriState’s hospital member, may have market power in their respective markets, it appears that the program as described is unlikely to enable them to exercise or increase any such power. Critical to this determination is the representation that physician members and the hospital member will remain available to contract individually outside the proposed program. If participants were to operate in ways different from what TriState has proposed, TriState’s program could raise serious competitive concerns. As is customary with FTC advisory opinions, our conclusions are based on your representations and the information that you have provided. As a prospective assessment based on limited2 information, the advisory opinion is necessarily tentative and expresses the staff’s current enforcement views, which likely would change if implementation of the proposed program proved to have anticompetitive effects. I. Description of TriState and Its Current Operations TriState is a physician-hospital organization (“PHO”) based in Hagerstown, Maryland, whose more than 200 physician members and one hospital member are located in Washington County, Maryland. TriState is organized as a Maryland non-stock membership organization, and was incorporated in 1995. It has two classes of membership : Class I members are physicians; and3 4 5
Letter to Christi J. Braun April 13, 2009 Page 3 (...continued)5 Approximately 40 of these Class I physician members are employees of TriState’s Class II member – W ashington County Hospital Association – or one of its subsidiaries. These employed physicians practice in eight specialty areas. The remainder of TriState’s Class I members are independently practicing physicians practicing in a variety of specialty areas. Currently, TriState also has approximately 70 non-members, including physicians, nurse midwives, and clinical social workers, with whom it contracts for the provision of health care services. W ashington County Hospital Association operates the 292 licensed acute care bed W ashington County 6 Hospital, which “offers a full range of adult and pediatric inpatient and outpatient services including intensive and progressive care units, a family birthing center, mental health services, cancer therapy, surgical care, cardiac catherization, physical and occupational rehabilitation, and diagnostic imaging.” The hospital’s licensed beds include 218 medical/surgical, 18 obstetric, 10 pediatric, 18 psychiatric, and 28 acute rehabilitation beds, and the facility is designated by the State of Maryland as a Level III Trauma Center. W ashington County Hospital Association also operates a variety of related diagnostic, treatment, and support facilities and services covering virtually every area of medical service need, including inpatient, outpatient, and home-based services. W ashington County Hospital Association also owns a minority interest in Maryland Physicians Care, a M edicaid HMO with approximately 90,000 members in Maryland, about 9,000 of whom are located in W ashington County. Washington County Hospital Association’s parent organization, W ashington County Health System, Inc., also owns Antietam Health Services, a for-profit subsidiary that operates or joint ventures in a variety of business enterprises related to the provision of outpatient health care services, such as diagnostic imaging, outpatient surgery, endoscopy, medical transport, medical supplies, and management services. Specifically, you have identified W ashington and Frederick counties in Maryland, Franklin and Fulton 7 counties in Pennsylvania, and Morgan, Jefferson, and Berkeley counties in W est Virginia as the areas served by W ashington County Hospital and TriState. You describe InforMed as “an Annapolis, Maryland health-care consulting and information technology 8 company that provides third party administrator (‘TPA’) services, medical management, health information reporting, health information technology, and a regional network of physicians, hospitals, and ancillary providers.” You state that “TriState physicians deal directly with InforMed on any issues related to fees or payment of 9 (continued...) the sole Class II member is Washington County Hospital Association, a non-profit corporation that operates Washington County Hospital and which, in turn, is a member of the Washington County Health System, Inc., also a non-profit corporation. TriState’s physician members6 provide medical services to patients located in western Maryland, southern Pennsylvania, and northern West Virginia, although you state that their primary service area essentially is7 Washington County, Maryland. TriState began as a risk-sharing joint venture to enter into capitation contracts with payers. It, however, offered such risk-sharing arrangements for only one year. Since 1998, TriState and its physicians have offered their services through InforMed, L.L.C. TriState members who wish to8 participate in the InforMed provider network, Community Health Partners, each separately and individually agree to accept InforMed’s fee-for-service reimbursement rates, and sign participation agreements with TriState evidencing their agreement to participate in InforMed’s network through TriState. Under this arrangement, TriState has contracted with InforMed for9
Letter to Christi J. Braun April 13, 2009 Page 4 (...continued)9 claims. W hen fee schedule modifications are made, practitioners are free to accept, reject, or negotiate modifications with InforM ed directly. TriState is not involved in these discussions.” W e have not reviewed this aspect of TriState’s current operations, and offer no opinion regarding TriState’s or its physician members’ current activities involving InforMed. Under the proposed program, however, utilization management will be under the supervision of physicians, 10 rather than the TriState staff, and be done by the Quality Assurance/Utilization Management Committee and the Quality Improvement Committee. TriState’s contracted non-physician providers include four nurse-midwives employed by W ashington County 11 Hospital Association, and fifteen clinical social workers, who are not eligible to be Class I members of TriState. You state that TriState’s primary service area, which includes and extends slightly beyond W ashington 12 County, Maryland, has a population of about 145,000. TriState’s secondary service area, which includes parts of (continued...) TriState’s providers to participate in the Community Health Partners network, and for TriState to provide certain administrative services for InforMed, including physician credentialing, network management, clinical oversight, and utilization review. TriState also has agreed to obtain certain information technology services from InforMed, including “management of TriState’s claims information database, design and support of an interactive website, and internet-based software for eligibility verification and medical referrals.” TriState currently sells an employee wellness program and provides medical management services, including case management, disease management, and pharmacy management services. These programs are operated primarily by TriState’s administrative staff, and are sold separately from the services of TriState’s physicians. The proposed program will include these services,10 along with the various components that directly involve the provision of services by TriState’s physicians. II. The Current Market Environment in Which TriState Operates You describe TriState as currently having 212 member physicians, including about 40 member physicians employed by Washington County Hospital, itself also a TriState member, with the remaining 172 physician members being privately practicing physicians in 78 separate practices. You also note that there are about 50 additional “contracted” physicians and 19 contracted non- physician health care providers who, while not formally members of TriState, nevertheless currently provide services to persons covered under TriState’s existing contracts through InforMed. Finally, you state that Washington County Hospital – the only hospital in the county11 – has a medical staff of 319 physicians. It therefore appears that TriState physicians represent a very substantial majority of the physicians practicing at the hospital and in Washington County, which you identify as both TriState’s and the hospital’s primary service area; that is, the area from which the hospital draws more than 80 percent of its admissions.12
Letter to Christi J. Braun April 13, 2009 Page 5 (...continued)12 Pennsylvania and W est Virginia, as well as Frederick County, Maryland, has a population approaching 350,000. InforMed provides third-party administrator services, such as claims processing, to the contracting employers, 13 and offers utilization and medical management services to employers that want those services. The W ashington County Health System, Inc., employee benefit plan covers about 5,000 lives. The two other 14 self-insured employer programs that TriState and its physician members serve through InforMed together cover about 650 lives. A. Alternatives to TriState or Its Members in TriState’s Service Area 1. Provision of Medical Services by TriState Physicians Other Than Through TriState TriState physicians provide their professional medical services through a variety of arrangements. TriState physicians who participate in InforMed’s Community Health Partners network provide their services to persons covered under contracts that InforMed has entered into with self-insured employers in Washington County. InforMed contracts with self-insured employers to offer access to its provider network, which includes physician and hospital providers. InforMed currently has contracts with three self-insured employers in the area,13 covering a total of about 5,650 lives. The largest InforMed contract for which TriState provides medical services is with the employee benefits plan for the Washington County Health System, Inc., the parent organization of TriState’s sole Class II member, the Washington County Hospital Association.14 Besides offering their medical services through InforMed’s provider network, you state that TriState physicians also participate in a variety of programs involving other payers. You identify various government programs and several commercial payers operating in TriState’s service area. You state that TriState member physicians participate in these payers’ programs through individual contracts entered into between the physicians and each payer and, while you provide no specific statistics in this regard, you state that TriState’s members “contract directly with most payers.” 2. Other Providers and Networks in TriState’s Service Area TriState appears to include a substantial majority of the physicians practicing in Washington County, TriState’s primary service area. And, as you acknowledge,“[t]here are no other IPAs or PHOs other than TriState operating within Washington County.” You also state, however, that TriState physicians represent a considerably smaller percentage of physicians within TriState’s (and Washington County Hospital’s) much broader secondary
Letter to Christi J. Braun April 13, 2009 Page 6 You note that there are about 1,200 physicians in TriState’s secondary service area, of which TriState 15 physicians represent only about 16 percent. You have not, however, specified what percentage of physicians in TriState’s primary service area – essentially W ashington County, Maryland – TriState’s physicians represent. You describe Waynesboro Hospital as “a 62-bed hospital . . . (about 20 minutes north of Hagerstown),” and 16 identify “the 232-bed Chambersburg Hospital . . . [as] located about 30 minutes from Hagerstown.” You describe City Hospital as “a 144-bed hospital . . . [located] [t]hirty minutes to the south [of 17 Hagerstown].” You describe Frederick Memorial Hospital as “a 253-bed hospital located about 30 minutes east of 18 Hagerstown.” You state that “Frederick County’s only physician contracting organization ceased operations on December 31, 2006, and most of its former members now contract directly with payers.” service area, which accounts for an additional 14.5 percent of hospital admissions. Within this15 broader service area, you identify three other health systems and two related provider networks. These include Summit Health, with hospitals in Waynesboro and Chambersburg, Pennsylvania, and the Cumberland Valley Health Network – a PHO “aligned with Summit Health;” City16 Hospital in Martinsburg, West Virginia, and the Eastern Panhandle Integrated Delivery System, a “provider-sponsored, vertical arrangement of physicians and hospitals serving nine counties in eastern West Virginia,” through which “many of . . . [City Hospital’s] medical staff members contract with payers;” and Frederick Memorial Hospital in Frederick, Maryland, which you17 state no longer has a contracting physician network dealing with payers.18 B. Payers Operating in TriState’s Service Area In addition to InforMed’s Community Health Partners network, through which TriState physicians provide services under its self-insured employer contracts, you identify a variety of third-party payers and programs that operate in TriState’s combined primary and secondary service areas. Government payer programs include Medicare, Medicaid, and Tricare, which you estimate together cover approximately 48 percent of all patients in the area, with worker’s compensation covering slightly more than one percent of area patients. About four and a half percent of patients are identified as self-paying, not covered by any third-party payer program. The remaining roughly 46 percent of area patients are covered by non-governmental health plans. The largest commercial payers in the area are CareFirst Blue Cross Blue Shield, and United Health Care/MAMSI, which together cover almost 71 percent of those with private coverage. In addition, Aetna and Cigna do business in the area. While you did not provide statistics specifically addressing payer market shares in the health system’s and TriState’s smaller primary service area, you state that TriState “has no reason to believe . . . that the statistics would be different if it looked only at patients residing in Washington County, Maryland, which is roughly its primary service area.”
Letter to Christi J. Braun April 13, 2009 Page 7 In contrast to TriState’s current contracts with self-insured employers through InforM ed, under TriState’s 19 proposed program, InforM ed will no longer serve as the third-party administrator for self-insured employers. InforMed will, however, continue to serve as the data warehouse, software developer, and technical vendor for TriState. III. TriState’s Proposed Program A. Purpose and Description of the Proposed Program TriState now proposes to develop and implement a program through a “multi-provider network joint venture that will integrate its members clinically as described in Statements 8 and 9 [of the joint FTC and Department of Justice Health Care Statements].” Under the proposed program, TriState’s members would provide medical and other health care services, including hospital services, to persons covered under health benefits programs offered by self-insured employers and other payers in TriState’s service area. TriState identifies three main objectives for its proposed program: (1) to “facilitate and assure cooperative interaction and collaboration among TriState’s member physicians” so as to “align the efforts of the physicians to improve their patients’ health and their delivery of services, resulting in the right care being rendered in the right setting at the right time;” (2) to “engage every TriState stakeholder – physicians, case managers, administrators, payers, and patients – in a cohesive and comprehensive program of care management,” that “should result in identifiable quality improvements for patients and significant financial benefits for payers;” and (3) to allow TriState to offer payers “an integrated set of services . . . not previously available in the market,” which “will be desirable to self- insured employers looking to control their rising cost of providing health care coverage to employees,” and “will also offer a competitive advantage to health plans and other payers seeking to distinguish their products on the basis of quality or quality-adjusted cost.”19 TriState broadly describes itself and its proposed program as offer[ing] payers a network of primary care and specialist physicians whose services will be integrated through a formal and stringent medical management program that includes protocol development and implementation, performance reporting, procedures for corrective action when necessary, and aggressive management of high-cost, high-risk patients. The program will offer payers a network of coordinated services from physicians committed to improving outcomes by working together to achieve quality improvements not possible by working independently. TriState’s physicians will actively collaborate in the development of all facets of the program, ensuring the cooperative delivery of high-quality, cost-effective care.
Letter to Christi J. Braun April 13, 2009 Page 8 This letter broadly summarizes our understanding of various major aspects of the proposed program whose 20 components are described in greater detail in the materials you have submitted. You state that “[t]he main technology piece is InforMed’s virtual electronic health record, commonly referred 21 to by TriState as the Clinical Claims Chart (‘Chart’). Incorporated into the chart are Ingenix’s Symmetry family of products – Episode Treatment Groups (‘ETGs’), Episode Risk Groups (‘ERGs’), and Evidence Based M edicine Connect (‘EBM Connect’).” Episode Treatment Groups will collect data regarding claims and medical encounters or related services (e.g., pharmacy), and organize the data into episodes of care (similar to Medicare’s diagnosis- related groups), which can be used for provider profiling, utilization management, clinical benchmarking, and disease management. Episode Risk Groups can be used to predict health risk and identify high-risk patients in various categories. Evidence Based M edicine Connect focuses on several important preventative screening procedures and 50 costly medical conditions for which there is strong evidence supporting documented guidelines. Evidence Based Medicine Connect allows assessment of both provider and patient compliance with certain guidelines and preventative screenings, flags non-compliers, and allows the plan to target interventions, such as disease management, medication adherence, patient safety, and care patterns. As of mid-July 2008, you reported that 18 clinical practice guidelines had been approved by TriState’s Board 22 of Directors, and that 30 others were in various stages of development and review. The functions of developing and monitoring compliance with clinical guidelines, both individual and for the entire program, are performed by TriState’s Quality Improvement Committee, with involvement of multiple ad hoc committees of specialists in the areas to which the guidelines apply. TriState’s stated goal is to have “at least 80 percent of the medical conditions comprising at least 80 percent of the cost of care in the community, covered by at least one clinical guideline.” You note that typically about five percent of health plan beneficiaries account for 60 percent of claims 23 expenses, and that 40 percent of beneficiaries file no claims in a given year, supporting the view that focusing on the treatment of the relatively few high-cost patients may be the most effective way to achieve program cost savings. More specifically, you identify a variety of activities that TriState plans to undertake or expand from its current activities, as part of its proposed program. Central to the proposed program is20 TriState’s plan to implement a web-based health information technology system that will help identify “high-risk and high-cost patients,” and “will facilitate the exchange of patients’ treatment and medical management information” in order to “more aggressively manage . . . [TriState’s] patients’ care than . . . [the providers] could achieve working independently.”21 TriState believes that this “aggressive care management should result in identifiable quality improvements for patients and significant financial benefits for payers.” TriState is in the process of developing clinical practice guidelines, and will monitor physicians’ adherence to them, as well as more broadly seeking means of improving clinical efficiency through other changes in the program’s policies and procedures. TriState will use InforMed’s22 software to review episodes of care; i.e., “all of the medical care and services a patient receives from the onset of an illness or disease through final treatment,” to determine where performance improvement will have the greatest financial and quality benefits. This information will be23 used to review and, as appropriate, modify specific clinical guidelines or “care protocols” used by TriState in the proposed program. The Quality Improvement Committee and TriState staff will seek to identify instances of both overutilization and underutilization of services, and work with physicians to address these issues.
Letter to Christi J. Braun April 13, 2009 Page 9 The initial period for current non-members to join TriState is 60 days, after which there will be an annual 30- 24 (continued...) TriState also will develop, implement, and oversee policies and procedures related to the program’s utilization management, case management, and disease management activities. As noted previously, TriState currently offers and sells medical management services, including case management, disease management, and pharmacy management programs, as well as employee wellness programs, which are provided by TriState’s administrative staff. These services also will be part of TriState’s proposed program. TriState will also continue to offer these services separately from its proposed program for those who are interested only in purchasing these specific services. However, when they are provided as part of the proposed program, these services will be under the direction of the physicians on the Quality Assurance/Utilization Management Committee and the Quality Improvement Committee, rather than just the TriState staff, and will be coordinated with the program’s protocol development and implementation, quality monitoring, and patient management services. As part of the proposed program, TriState will monitor achievement of physician performance targets, using peer, regional, and national benchmarks, and make recommendations for both individual and group performance improvement. Individual physicians’ performance will be the subject of “report cards” and peer counseling and educational efforts, as needed, with eventual discipline and even expulsion from the program, if necessary, for those who fail or refuse to conform their practices to the established program parameters. TriState’s stated goal, however, at least initially, is to “move the mean” in terms of the performance of its participants, rather than to winnow performance “outliers” from the program. Specific details of how TriState’s performance measurement and evaluation processes will operate, both for individual TriState physicians and for the group as a whole, were not provided. You noted that TriState “is in the very early stages of determining which metrics initially will be measured, how they will be measured, and how this will be communicated to the membership.” B. Participants’ Obligations and Commitments Under the Proposed Program 1. Membership and Financial Investment in TriState While most of the physicians who provide their professional services under TriState’s current contracts already are Class I members of TriState, a substantial number of physicians and other health care providers have been non-members who operated under “contractor” arrangements to provide services under TriState’s payer contracts. In order to assure the necessary commitment to the proposed program and its requirements, you state that TriState is eliminating this form of participation status. Physicians who wish to participate in the proposed program will be required to be or become Class I members of TriState. After an initial, time-limited, opportunity to join TriState, physicians who subsequently wish to become members will be limited in their opportunities to do so. For a multi-physician group practice to participate in the proposed24
Letter to Christi J. Braun April 13, 2009 Page 10 (...continued)24 day open enrollment period for physicians who initially declined enrollment to join. Exceptions to this limitation on new members also will be made for physicians needed in “must-have” or limited access specialties and for physicians new to the community who join existing practices that already are members of TriState. You state that “[m]oving forward . . . [TriState] intends to be much more selective in allowing new physicians to join,” although it appears that the substantial majority of physicians practicing in TriState’s primary service area already are, or after the initial enrollment period will be, members of TriState. Apparently physicians and other health care providers who are not TriState members nevertheless may be 25 allowed to provide services to patients covered under TriState’s program contracts with self-insured employers or other payers if the employer or payer chooses to allow access to this supplemental provider panel, and separately contracts with Informed’s Community Health Partners network or other providers or networks for such services. You anticipate that this type of arrangement may occur regarding the W ashington County Health System, Inc., employee benefit plan that currently is TriState’s largest contract. You go on to say that, in order to provide incentives for enrollees to stay within the program for their care, TriState will attempt to have payers designate these additional providers as part of a “second tier network,” with higher co-payments and lower benefits (unless waived due to medical necessity) for enrollees using their services. You should be aware that the conclusions regarding TriState’s and its members’ joint negotiation and contracting with payers regarding the proposed program does not apply to any arrangements between payers and such supplemental provider networks, whose participants are not fully integrated into the proposed program. program, all of the practice’s physicians – including any who subsequently join the practice – must become TriState Class I members and agree to all requirements of participation in the program. TriState’s fifteen currently contracting licensed clinical social workers, who as non- physicians are not eligible for formal membership, will provide services through direct contracts with InforMed’s Community Health Partners network. The four nurse midwives currently25 providing services already are employees of TriState’s hospital (Class II) member. In order to become a Class I member of TriState, a physician must submit a written application, successfully complete TriState’s credentialing process, be approved for membership by the TriState’s board of directors, pay the required “joining fee” of $2,500, and sign a participating provider contract that TriState has designed especially for the proposed program, which spells out the obligations and requirements of both the physician and TriState regarding the program. 2. Participating Provider Contract The “TriState Member Participating Provider Contract – Clinical Integration,” which each physician member must execute, is the primary document formally evidencing TriState physicians’ commitment to, and specifying their obligations regarding, the proposed program. One requirement of the agreement is that member physicians agree in advance to participate in all contracts that TriState enters into with payers for the proposed program, and to comply with the requirements of those contracts. Physicians cannot opt out of participating in individual contracts, or pick and choose among them regarding their participation. You state that this requirement helps to assure that the panel of physicians providing services under the program is stable and identifiable at the outset, and is not likely to vary from contract to contract. Having a stable, identified panel of physicians, in turn, is expected, among other things, to facilitate in-
Letter to Christi J. Braun April 13, 2009 Page 11 Regarding the situation, mentioned previously, where patients enrolled in the proposed program choose to 26 seek care from providers who are not members of TriState, but who are part of the Community Health Partners provider network, you anticipate that “[i]n the event that Plan enrollees see CHP physicians, the [TriState] physicians, through monitoring of their patients’ EHRs [electronic health records], should be able to determine whether or not their patients received guideline-directed care from the CHP physicians and, through follow-up care, make up for any omissions. Although its achieved efficiencies may not reach the level of a closed-panel product, [TriState] intends to do what it can to optimize the quality of care its patients receive, even if those patients self- select and receive some care outside [TriState’s] network.” network referrals, continuity of care, familiarity by physicians with the program’s standards and requirements, and adherence to those standards and requirements.26 A second aspect of the proposed program contained in the participating provider contract is that TriState physicians generally agree to refer patients to other TriState network physicians “when medically appropriate,” with the exception that this does not require the referring physician “to direct Enrollees to other Network providers from whom the Enrollee does not wish to receive treatment.” Requiring in-network referrals as the default standard both helps to assure that referred patients will continue to receive care under the practice standards and requirements of TriState’s program, and allows TriState to obtain more complete information regarding both the care provided to those patients and the performance of the treating physicians regarding that treatment. This information, in turn, facilitates TriState’s monitoring and oversight activities, and thus achievement of the program’s potential efficiencies in providing coordinated and appropriate patient care. The participation agreement also generally obligates each physician member to comply with all of TriState’s “policies, procedures, rules and regulations,” and specifically identifies a number of areas where physicians must cooperate with the proposed program. For example, physicians must cooperate with the proposed program’s requirements regarding utilization management, patient referrals, pre-authorization of services, use of clinical practice guidelines, provision of information to TriState for it to effectively monitor physician performance and patient care, and operation of various other oversight and review aspects of the program. Physicians also agree that they and their office staff will be trained in, and use, TriState’s health information technology capabilities. 3. Personal Participation by TriState Member Physicians in the Development and Operation of the Proposed Program You state that “every physician who agrees to participate in the clinical integration program will acknowledge their commitment to fully support the tenets of the program by assisting in the development of, and practice to, the clinical practice guidelines created in collaboration with their peers, utilizing the tools embedded in the EHR [electronic health record], and showing progress towards continual process improvement (‘moving the mean’).” You point out that
Letter to Christi J. Braun April 13, 2009 Page 12 In addition to its board, TriState has committees responsible for various non-clinical operational functions 27 (Nominating, Bylaws, Communications, and Contracting Finance Administration), as well as committees and sub- committees for clinical operations. The Clinical Integration Oversight Committee, which is the body most directly responsible for overall supervision and oversight in this area, includes the chairs of five related sub-committees – Credentialing, Quality Assurance/Utilization Management, Quality Improvement, Pharmacy Benefits Management, and Care Coordination. Physicians may request that they be excused from such activities if they would “constitute a serious hardship 28 or undue burden,” including such justifications as “excessive demands of professional practice, personal or family health considerations, and service on committees or boards.” more than forty physicians “currently are participating in formal committees and governance” regarding TriState. You also state that27 [m]any more physicians, although not formal committee members, have served on an ad hoc basis, assisting in the review of clinical practice guidelines that impact their specialty. It is expected that virtually the entire membership, at one time or another, will participate in the development of some component of the program. This not only is an expectation of continued membership in [TriState], but also an affirmation of commitment to clinical integration. Under the participating provider contract, physician members agree to “cooperate with [TriState] in the development and implementation of [TriState’s] clinical integration program.” They also agree to “give due consideration to a request . . . to participate in” such activities as sharing clinical best-practice ideas and methods; developing, reviewing, or commenting upon clinical practice guidelines; leading a training session regarding a clinical practice guideline; reviewing patient files of a Network Practitioner and making recommendations for improvement; and mentoring a Network Practitioner.28 C. Mechanisms to Assure Physicians’ Compliance with TriState’s Program Requirements TriState has established mechanisms to identify physicians who appear to be high-cost providers or over/under users of resources. As noted previously, to participate in the proposed program, TriState physicians will be required to execute a “TriState Member Participating Provider Contract – Clinical Integration,” which identifies the various core aspects of the proposed program, and evidences the physicians’ agreement to participate in the program and comply with its requirements. Among those requirements are providing TriState with patient and treatment information necessary to implement its programs, complying with TriState’s clinical practice guidelines, assisting TriState in completing quality, safety, and cost assessments, serving on TriState clinical integration oversight subcommittees, cooperating in the development and implementation of the program, referring enrollees to other network practitioners, when medically appropriate, and accepting, being trained on, and using TriState’s information technology hardware and software, and complying with TriState’s rules and regulations.
Letter to Christi J. Braun April 13, 2009 Page 13 TriState will monitor each physician’s compliance with its treatment protocols and other practice requirements. This process will include providing the physician with comparative data relative to the performance of the other TriState physicians, and using other benchmarks and peer counseling in order to generate performance improvement. You identify instances where, in the past, TriState had to deal with physicians or practices that were reluctant to accept certain monitoring or practice standard requirements, and where TriState was successful in convincing those physicians to embrace those requirements. Finally, you note that “[w]hen necessary, however, TriState will remove physicians from its network who refuse to improve (‘culling the outliers’).” D. Measurement and Achievement of Efficiencies from the Proposed Program TriState has not attempted to quantify the potential or likely overall efficiency benefits of its proposed program, or specified how overall cost or quality efficiency gains will be measured. However, as evidence of TriState’s capability to achieve measurable efficiency improvements, you describe the results of a pilot “pay for performance” disease management program for diabetes that TriState implemented for Washington County Health System, Inc., employees from 2005 through 2008. Using 2005 data as a baseline, TriState reports achieving what appear to be significant improvements in population clinical results (e.g., hemoglobin A1c values, and frequency of several indicated tests), and reductions in several measures of use of expensive and potentially avoidable hospital and other medical resources (population utilization results). The pilot program was credited with achieving savings calculated at $159,898.00, which were evenly split between TriState and Washington County Health System, Inc. Regarding measures of performance for the proposed program, you state that TriState “is in the very early stages of determining which metrics [of performance] initially will be measured, how they will be measured, and how this will be communicated to the membership.” You state that TriState’s proposed program will identify “best practices” and then identify both over-utilization and under-utilization of services by participating physicians. Through feedback, and promoting “best practices,” TriState will seek to “move the mean” on key quality indicators, such as increasing rates of colorectal cancer screening, lowering hemoglobin A1c levels, and improving lipid profile scores. TriState will monitor the cost of care and use of resources by each physician and, through use of “report cards,” provide performance feedback to each physician, including comparisons with both their peers’ performance and regional and national performance benchmarks. You, however, have not provided details of this feedback process, such as the form and the frequency of the performance report cards, or how the system of applying remedial measures to improve performance will operate.
Letter to Christi J. Braun April 13, 2009 Page 14 See, e.g., Arizona v. Maricopa County Medical Society, 457 U.S. 332 (1982); United States v. Trenton 29 Potteries Co., 273 U.S. 392 (1927). See United States v. Addyston Pipe & Steel Co., 85 F. 271 (6 Cir. 1898), modified 175 U.S. 211 (1899). This th 30 analytical approach was subsumed within the analysis that the Commission applied in Polygram Holding, Inc., 5 Trade Reg. Rep. (CCH) ¶ 15,453 (FTC 2003) (available at www.ftc.gov/os/caselist/d9298.shtm, aff’d. sub nom. Polygram Holding, Inc. v. FTC, 416 F.3d 29 (D.C. Cir. 2005), and North Texas Specialty Physicians, 2005-2 Trade Cas. (CCH) ¶ 75,032, (available at http://www.ftc.gov/os/adjpro/d9312/index.shtm, aff’d. sub nom. North Texas Specialty Physicians v. FTC, 528 F.3d 346 (5 Cir. 2008). Likewise, this analytical approach was incorporated by th the federal antitrust enforcement agencies in both the Health Care Statements and the Federal Trade Commission and the U.S. Department of Justice, Antitrust Guidelines for Collaborations Among Competitors (April 2000) (hereinafter Competitor Collaboration Guidelines) (available at http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf). The Health Care Statements, for example, specify how, consistent with general antitrust law principles, physician network joint ventures’ negotiating and contracting with payers on behalf of their competing physician members will be analyzed by the antitrust enforcement agencies: “In accord with general antitrust principles, physician network joint ventures will be analyzed under the rule of reason, and will not be viewed as per se illegal, if the physicians’ integration through the network is likely to produce significant efficiencies that benefit consumers, and any price agreements (or other agreements that would otherwise be per se illegal) by the network physicians are reasonably necessary to realize those efficiencies.” Health Care Statements at Statement 8, § B.1. See also Health Care Statements, Statement 9 at § A. (regarding multi-provider networks). The Competitor Collaboration Guidelines state (at § 3.2), “If . . . participants in an efficiency-enhancing integration of economic activity enter into an agreement that is reasonably related to the integration and reasonably necessary to achieve its procompetitive benefits, the Agencies analyze the agreement under the rule of reason, even if it is of a type that might otherwise be considered per se illegal.” See also Letter to Clifton E. Johnson, Esquire, and W illiam H. Thompson, Esquire from David R. Pender, Acting Assistant Director, Bureau of Competition, Federal Trade Commission (March 28, 2006) (staff advisory opinion concerning Suburban Health Organization, Inc.) (available at http://www.ftc.gov/os/2006/03/SuburbanHealthOrganizationStaffAdvisoryOpinion03282006.pdf), at n. 14-17, and accompanying text. IV. Analysis A. The Legal Standard Tristate’s proposed program will involve agreement on the levels of fees to be charged by its competing physician members for their professional medical services provided under contracts between TriState and various payers. TriState also will be collectively negotiating on behalf of its competing physician members the terms of dealing, including price terms, by those physicians under contracts between TriState and various payers. In the absence of adequate justification for this activity, such a course of conduct would be summarily condemned as per se illegal price fixing under long-standing antitrust law standards. Further analysis as to29 competitive effects of this type of conduct is required, however, when it occurs in the context of a potentially efficiency-enhancing joint venture among otherwise competing market participants, and the competitive restraints are “ancillary” to the joint venture – i.e., subordinate to the primary purpose of the legitimate and potentially procompetitive joint venture, and reasonably necessary to its success and achievement of the efficiencies it makes possible. We address30 TriState’s proposed program under this standard for “clinical integration.”
Letter to Christi J. Braun April 13, 2009 Page 15 See Health Care Statements at Statement 8, § A.4. (Sharing of substantial financial risk “normally is a clear 31 and reliable indicator that a physician network involves sufficient integration by its physician participants to achieve significant efficiencies. Risk sharing provides incentives for the physicians to cooperate in controlling costs and improving quality by managing the provision of services by network physicians.”); Statement 8, § B.1. (“W here the participants in a physician network joint venture have agreed to share substantial financial risk . . . their risk-sharing arrangement generally establishes both an overall efficiency goal for the venture and the incentives for the physicians to meet that goal.”). Health Care Statements at Statement 8, § B.1. The Health Care Statements emphasize, however, that these 32 are only illustrative examples: they “are not . . . the only types of arrangements that can evidence sufficient integration to warrant rule of reason analysis [also assuming, of course, that the agreements eliminating competition among the participants in the arrangement are reasonably necessary to achieve the arrangement’s potential efficiencies], and the Agencies will consider other arrangements that also may evidence such integration.” B. Integration and Likelihood of Achieving Significant Efficiencies Through TriState’s Proposed Program The Health Care Statements address certain ways in which physician or other health care networks may be able to evidence that they involve sufficient integration among the participants so as to be likely to produce significant efficiencies. One type of arrangement through which integration may occur involves creation of a high degree of interdependence among the network’s participants in the provision of care to patients served by the provider network. In networks involving significant clinical integration, the antitrust inquiry and analysis initially seek to ascertain whether the program’s structure and operation have the capability, and the participants have the necessary motivation, to achieve the program’s intended efficiency goals in the absence, for example, of the financial incentives and constraints typically provided by arrangements that involve the sharing of substantial financial risk by the network’s participants.31 In describing networks whose members clinically integrate, the Health Care Statements note that such integration can be demonstrated: by the network implementing an active and ongoing program to evaluate and modify practice patterns by the network’s physician participants and create a high degree of interdependence and cooperation among the physicians to control costs and ensure quality. This program may include: (1) establishing mechanisms to monitor and control utilization of health care services that are designed to control costs and assure quality of care; (2) selectively choosing network physicians who are likely to further these efficiency objectives; and (3) the significant investment of capital, both monetary and human, in the necessary infrastructure and capability to realize the claimed efficiencies.32
Letter to Christi J. Braun April 13, 2009 Page 16 Health Care Statements at Statement 8, § B.1. See also Statement 9, § B.2.c. 33 Most multiprovider networks will contract with some, but not all, providers in an area. Such selective contracting may be a method through which networks limit their provider panels in an effort to achieve quality and cost-containment goals, and thus enhance their ability to compete against other networks. One reason often advanced for selective contracting is to ensure that the network can direct a sufficient patient volume to its providers to justify . . . adherence to strict quality controls by the providers. It may also help the network create a favorable market reputation based on careful selection of high quality, cost-effective providers. In addition, selective contracting may be procompetitive by giving non-participant providers an incentive to form competing networks. Health Care Statements at Statement 8, § B.1. 34 It is not clear whether other physicians practicing in TriState’s service area, but who currently are neither 35 TriState members nor contracting physicians, are also being given the opportunity to join TriState and participate in the proposed program. 1. Selective Participation of Network Physicians in the Proposed Program One aspect of provider network programs that is likely to affect their success in achieving integrative efficiencies is “selectively choosing network physicians who are likely to further . . . [the program’s] efficiency objectives.” These physicians must33 agree to certain practice and business constraints, as well as to be subject to a variety of monitoring, oversight, and remedial activities by the network, in order to assure that the anticipated integration and efficiencies of the program can be achieved. There may exist a tension between a network arrangement’s desire to include all interested or eligible providers, and its need to restrict participation only to those who are fully committed to accepting the significant limitations on their independent decision making that are necessary if the network is to succeed in controlling costs and improving quality. Moreover, the larger a network becomes, the more difficult it may be to establish the “high degree of interdependence and cooperation among the physicians to control costs and ensure quality” that is the hallmark of clinical34 integration. TriState has stated that participation in the proposed program is open to all current members who agree to the proposed program’s requirements and to all contracting physicians who become TriState members and likewise agree to the program’s requirements. Thus, TriState is not35 initially being “selective” by excluding in any significant way local area providers from eligibility to participate in the proposed program. TriState’s proposed program will, however, impose a number of requirements that are likely to discourage providers not fully committed to the program from seeking to join it, and thus assure that those who do choose to participate will be fully committed to its goals and requirements.
Letter to Christi J. Braun April 13, 2009 Page 17 See Health Care Statements at Statement 8 at § B.1.; Statement 9 at § A. (referencing Statement 8 at § B.1.). 36 W hile not specifically addressed in the Health Care Statements, nor readily quantifiable, we nevertheless are 37 aware that many physicians, as responsible professionals, may be self-motivated to enthusiastically participate in innovative programs aimed at improving quality and reducing costs for their patients. This type of incentive for efficiency, however, may not apply or apply equally to all physicians. This particularly may be the case where the prevailing method of payment for physicians’ services is on a fee-for-service basis, which creates financial incentives to provide more services, rather than rewarding the more efficient and effective provision of services. Most important among the requirements of participation is that each physician must become a full member of TriState, and execute a participating provider contract, which obligates the physician to participate and cooperate in all of the various efficiency-enhancing aspects of the proposed program. With regard to membership, TriState is eliminating the category of “contracting physicians,” whereby physicians previously could provide, and be paid for, services under TriState contracts, without becoming full members of the organization. Thus, to participate in the proposed program, physicians must commit to membership in TriState, incur the financial and other obligations of membership, sign the new provider participation contract for the program, and accept the obligations that agreement entails. Concurrently, TriState is restricting the circumstances under which physicians subsequently may join TriState and participate in the proposed program. These actions appear to be intended, and likely, to require both current physician members and contracting physicians to assess their willingness to commit to the requirements of the proposed program at this time. This, in turn, should result in TriState having a provider panel that will largely be “closed,” and which will include only physicians who have fully and knowingly committed to both the organization and its proposed program. 2. Physician Investment of Monetary and Human Capital in the Proposed Program The Health Care Statements note that “the significant investment of capital, both monetary and human, in the necessary infrastructure and capability to realize the claimed efficiencies” of a network joint venture may help evidence that it involves substantial integration that is likely to result in significant efficiencies. Such “investment” by participants can evidence their stake in,36 and degree of commitment to, the successful operation of the venture, and therefore support the likelihood of the program achieving efficiencies as a result of the participants’ joint activity through the enterprise. While not necessarily sufficient in itself, substantial financial or other investment by participants in a joint venture supports the view that the participants are likely to be motivated to work toward the venture’s success in the market – which, in this case, requires it to succeed in improving the quality, and controlling the costs, of the health care services provided pursuant to the proposed program to their patients who are enrolled in the program.37 As mentioned earlier, physicians are required to pay an initial “joining fee” upon becoming members of TriState. Most of TriState’s physician members presumably paid this fee around the time of TriState’s establishment in the mid-1990s, with those joining since then paying the fee upon becoming new members. Physicians that previously were contracted
Letter to Christi J. Braun April 13, 2009 Page 18 W hile no such additional fees currently are contemplated, TriState’s board is empowered to levy additional 38 assessments on the membership, if it deems such action to be necessary. physicians, rather than members, and who accept TriState’s offer to now become members, also will be required to pay this fee as a condition of membership. There will, however, be no additional direct financial contributions or investments required of TriState members in order to fund or participate in the proposed program. While you state that “[t]he program’s success will38 require a portion of the members’ capital contributions to finance the infrastructure and HIT [health information technology],” it is difficult to characterize using a portion of the initial joining fee paid by most TriState members many years ago as a significant financial investment in the proposed program, or as one that is likely to instill in long-time members a particular sense of commitment to the new proposed program’s success. For new member physicians of TriState, however, the joining fee of $2,500 may provide at least some sense of financial investment in the proposed program, and a consequent degree of “buy-in” by them to the program’s success. In addition, you state that those physicians – for example, previously contracted physicians who newly become members of TriState in order to participate in the proposed program, likely will need to invest an estimated $2,600 in computer and related equipment in order to participate in the program. Finally, all participating physicians and their office staffs will be required to devote time to being trained in the program’s operation, particularly those aspects related to use of its health information technology and electronic health records. You estimate that this will equate to a cost of about $2,500 in physician billing and office staff time for the average two-physician office. These combined financial investments in the program – for joining TriState, for purchase of computer and related equipment, and for lost billing and staff time to receive training for the program – while not trivial, nevertheless appear relatively modest for many physician practices, particularly for the substantial majority of physicians who previously paid the $2,500 TriState joining fee, and may also have acquired the computer systems needed for the proposed program as part of their participation in TriState’s previously existing programs. For physicians newly joining TriState to participate in the proposed program, the total investment, which by your estimate could be as much as $7,600, is a more substantial sum. Overall, in our opinion, while this financial investment may provide some sense of identification with TriState and its proposed program, it appears unlikely, by itself, to be sufficiently great to strongly motivate the majority of TriState physicians to work toward the success of the program. However, financial investment is not the only form of investment in the proposed program by TriState’s physician members. You state that “[t]he [proposed] program’s success will also require the physician participants’ to invest significant amounts of time and effort serving on TriState’s formal and ad hoc committees, implementing guidelines and protocols in their practices, integrating medical management into their practices, collaborating in the care of their patients, and working together to achieve their quality and cost benchmarks.” As mentioned earlier, a substantial number of TriState physicians already have contributed their time and effort
Letter to Christi J. Braun April 13, 2009 Page 19 Regarding what the Agencies refer to as the necessary infrastructure and capability to achieve significant 39 integrative efficiencies, knowledgeable commentators have emphasized the importance of systematized approaches – sometimes referred to as “organized processes” – in achieving the potential efficiency benefits of clinical integration arrangements among otherwise independently practicing physicians. See, e.g., L. P. Casalino, The Federal Trade Commission, Clinical Integration, and the Organization of Physician Practice, 31 J. of Health Politics, Policy and Law 569 at 580-81 (June 2006) (“[T]here is ample evidence both that the use by physician groups of organized processes to improve quality is effective and that it is uncommon (citations omitted). The processes suggested by the FTC clinical integration policy are consistent with the literature on quality improve- ment . . . .”); L. P. Casalino, R. R. Gillies, et al., External Incentives, Information Technology, and Organized Processes to Improve Health Care Quality for Patients with Chronic Diseases, 289 JAM A 434 (January 22/29, 2003); and S. M. Shortell and L. P. Casalino, Health Care Reform Requires Accountable Care Systems, 300 JAMA 95 (July 2, 2008) (an “accountable care system” is “an entity that can implement organized processes for improving the quality and controlling the costs of care and be held accountable for the results.”). in developing various aspects of the proposed program and in serving on various formal and ad hoc committees. Moreover, you state that you expect that most physicians participating in the program will be called upon and expected, at one time or another, to contribute to the program’s operation and success by doing any of a number of tasks related to the design and successful implementation of the program’s specific aspects, and this expectation is specified in the Participating Provider Contract. In our view, and as described above, a significant number of TriState physicians appear to have made, and likely will continue to make, non-trivial investments of time and effort in the development and ongoing operation of TriState’s proposed program. In addition to many physicians participating in various committees and projects to develop the proposed program, most or all physicians will be required to incur significant opportunity costs in order to devote the necessary time for themselves and their staffs to be trained in use of the health information technology and electronic health records components of the program. TriState physicians also will be making some degree of financial investment in the program, particularly those physicians who newly become members of TriState, including previously contracting physicians who wish to participate in the proposed program. These various forms of “investment” by physicians in the proposed program together appear to evidence a substantial degree of commitment to the program’s success. Likewise, Washington County Hospital Association will be contributing significantly to the proposed program through having hospital and hospital affiliate employed staff participate in various committees and provide their expertise in a variety of and positions, and through the matching of physicians’ $2,500 joining fee for TriState membership. 3. Infrastructure and Program Capability for Integrating the Provision of Care and Achieving Efficiencies39 TriState appears to have included in its proposed program a variety of structural and operational aspects that seem likely to result in significantly increased interaction and cooperation among its physician members in the treatment of patients covered under the program. Among these are: (a) establishing a largely closed panel of providers committed to practicing consistently with evidence-based medicine standards and clinical guidelines developed or tailored by the program’s
Letter to Christi J. Braun April 13, 2009 Page 20 Payers frequently seek to provide enrollees with access to a broad network of providers in response to 40 consumer backlash against past restrictive provider panels under some managed care programs. participants; (b) maintaining continuity and coordination of care through a within-network referral policy; (c) requiring use of health information technology, including electronic health records, to coordinate care, effectively communicate among network providers, eliminate unnecessary duplication of tests, and collect performance data; (d) establishing mechanisms to collect and evaluate treatment and performance data, including data on appropriate use of health care resources; (e) requiring broad participation of the program’s physicians in various aspects of the program’s development, implementation, and ongoing operation; and (f) establishing procedures and mechanisms, including various committees that include participating physicians, to provide feedback on both individual and group performance, address performance deficiencies and, if necessary, impose sanctions for physicians whose performance is chronically deficient regarding program requirements and standards. One potential area of concern regarding the program’s ability to provide integrated care and achieve potential efficiencies, which you acknowledge, is the possibility of “leakage” of patients to non-TriState providers where a contracting employer or other payer allows enrollees to seek care out of network – for example by separately contracting for additional access to a broader network, such as InforMed’s Community Health Partners network. In addition to removing40 patients from TriState’s integrated care systems, this may create gaps in the information available to TriState regarding the patients’ treatment and health status. These types of potential gaps in care coordination and information for the proposed program, while perhaps unavoidable, nevertheless could prove to be problematic for TriState in achieving its integration and efficiency goals. TriState states that it intends to seek a tiering system in its payer contracts for the proposed program, providing financial incentives in the form of lower deductibles and copayments for enrollees who stay within the TriState network for their treatment. TriState also has arranged with InforMed to obtain access to data regarding enrollees’ use of services from other Community Health Partners network providers, and hopes to do this with other contracting payers, such as CareFirst Blue Cross Blue Shield, as well. Whether patient leakage outside the TriState network proves to be a significant problem for the proposed program, whether these remedial approaches can and will be implemented effectively, and whether they will prove adequate to address the problem, all are questions that cannot be answered with any confidence at this time. 4. Measurement and Evaluation of Performance Results The proposed program identifies a number of measures of physician performance, such as frequency of adherence to clinical practice guidelines, and both patient status and physician performance measures. But other than to generally state that individual and group performance on various as-yet-undetermined measures will be compared to peer, regional, and national benchmarks, you have provided very little information concerning how success or failure of the
Letter to Christi J. Braun April 13, 2009 Page 21 The hospital has matched physicians’ initial membership fee for joining TriState since TriState’s inception, 41 and continues to do so for new physician members. Several physicians employed by the hospital also serve in leadership positions in TriState, and several hospital and Antietam Health Services directors and managers serve on TriState committees. proposed program will be measured over time on a more macro level, such as in terms of cost or utilization of services by covered populations, or improvements in health status or outcomes. TriState’s pilot pay-for-performance program for diabetes treatment involving Washington County Health System, Inc., employees, which appears to have generated significant positive results – including financial savings from reduced hospital admissions and use resulting from the interventions – suggests that TriState already has some capability to measure and evaluate its and its members’ performance. The information you have provided indicates that TriState is in the process of further developing this capability. Moreover, it seems likely that, as a business necessity, TriState will have to be able to provide this type of performance outcome data over time and on a broader scale in order to convince employers and other payers of the potential benefits of contracting with TriState for the program. Thus, we are reasonably confident that TriState is or will be capable of implementing, and will have the incentive to implement, appropriate mechanisms to measure and evaluate its and its participants’ performance under the proposed program. We also note that TriState has expressed its intention to further develop a pay-for-performance program regarding its services, although that future aspect of the program will require a period of time for accumulation of baseline data, and is not formally addressed in this opinion letter. 5. Effect of Washington County Hospital Association’s Involvement on the Proposed Program’s Ability and Likelihood of Achieving Significant Efficiencies As noted previously, TriState is a physician-hospital organization that has as the sole member of one class of its membership Washington County Hospital Association, which operates the Washington County Hospital. Washington County Hospital Association has significant representation on the TriState board, and its representatives serve in numerous positions within the TriState organization. The potential effects of Washington County Hospital Association’s involvement (and, indirectly, that of its related organizations) in the proposed program on the likelihood of its achieving significant efficiencies are not clear. On the one hand the hospital has considerable resources, including financial contributions, technical support, and infrastructure, that it has made and will continue to make available to the program. These contributions to the41 joint venture by the hospital may help the proposed program to operate more effectively and may even have been essential for the program’s development and establishment in the first place. The hospital’s parent organization – Washington County Health System, Inc. – also is the largest employer in TriState’s primary service area, and its employee benefits program is the potential source of the largest number of covered lives for the proposed program. Washington County
Letter to Christi J. Braun April 13, 2009 Page 22 See also, e.g., L. R. Burns and R. W . Muller, Hospital-Physician Collaboration: Landscape of Economic 42 Integration and Impact on Clinical Integration, 86 The Milbank Quarterly 375-434 (2008) (discussing the differing and only partially overlapping goals of physicians and hospitals, and the implications for hospital-physician relationships). See also A. E. Cuellar and P. J. Gertler, “Strategic Integration of Hospitals and Physicians” (May 1, 2002) (available at http://faculty.haas.berkeley.edu/gertler/working_papers/hospital_VI_5_10_02.pdf) (paper examining whether efforts at hospital-physician integration leads to efficiency gains or is a strategy for the participants to improve bargaining power, and thereby increase prices.). This holds true where the price paid exceeds the cost of providing the service. 43 Moreover, under TriState’s bylaws, the board requires a majority vote of both the Class 1 Physician member 44 representatives and the Class 2 hospital representatives in order to take any action. Thus, it does not appear that the (continued...) Health System, Inc.’s related health care operations, such as lab and pharmacy, potentially also are positioned for effective use as part of the integration of care to enrollees under the proposed program. As you acknowledge in your submission, however, there also is a potential conflict of interest between the hospital and the proposed program. Under most current reimbursement systems,42 hospitals, as sellers of their services, often have an incentive to admit patients and fill available beds with paying customers, and to have them use diagnostic and treatment services for which the hospital receives additional payment. Due to the unique rate regulatory system in Maryland,43 however, although Washington County Hospital Association has an economic incentive to ensure that incremental admissions come to its hospital, it does not appear to have the incentive, and may even have a disincentive, to provide diagnostic and treatment services or lengths of stay in excess of the regulated reimbursement per discharge set by the state. Under these circumstances, Washington County Hospital Association’s financial incentives as a seller of services potentially could conflict with the proposed program’s goal of rationalizing the use of services provided to patients, including keeping them out of the hospital through disease management, use of preventive services, and adherence to treatment protocols, or even providing certain services to admitted patients. Any financial incentive of the hospital to increase admissions, however, may be tempered by the fact that Washington County Health System, Inc., as the area’s largest employer and TriState’s largest customer, pays for all the hospital services used by its employees and their dependents covered under its employee benefits program. Thus, in its role as a purchaser and payer of services on behalf of its employees, Washington County Health System, Inc., has a financial incentive to rationalize and more efficiently provide health care services, improve quality, and control its program costs, and to help TriState succeed in its efforts to do so. In sum, it is difficult to conclude one way or the other as to whether Washington County Hospital Association’s and its affiliates’ involvement in TriState’s operation is likely to enhance, undermine, or have no net effect on the ability and likelihood of TriState’s achieving significant efficiencies as a result of the proposed program.44
Letter to Christi J. Braun April 13, 2009 Page 23 (...continued)44 hospital’s involvement in TriState’s governance could result in TriState being forced to adopt policies or undertake activities that would benefit the hospital at the expense of successful operation of the proposed program. This conclusion, of course, represents only our best prospective assessment of the proposed program’s 45 potential. W hether TriState’s program in fact will create substantial integration among its physician participants, whether the program is capable of achieving significant efficiencies as a result of that integration, and whether the program’s participants will bring the requisite commitment and rigor to its implementation so as to achieve that integration and resulting efficiencies, can only be determined by TriState’s actual performance over time. W hile the potential benefits of a robust program appear intuitively obvious, the expected results of such efforts may not necessarily occur. See, e.g., D. Peikes, et al., “Effects of Coordination on Hospitalization, Quality of Care, and Health Care Expenditures Among Medicare Beneficiaries,” 301 JAMA 603 (Feb. 11, 2009) (finding no reduction in hospitalizations or other cost benefits, and only modest or no quality improvements, resulting from care coordination programs in fifteen Medicare demonstration projects); C. L. Damberg et al., “Taking Stock of Pay-For-Performance: A Candid Assessment From the Front Lines,” 28 Health Affairs 517 (March/April 2009) (evaluation after three years of the nation’s largest pay-for-performance program, by the Integrated Healthcare Association in California, found that, despite physician organizations reporting “increased physician-level performance feedback and accountability, speeded up information technology adoption, and sharpened . . . organizational focus and support for improvement in response to P4P,” investment in the program “had not translated into breakthrough quality improvements.”). Moreover, while some components of clinical integration programs may have been the subject of study in particular contexts, we are unaware of any significant body of the technical literature that has looked at, much less conclusively demonstrated in any generalizable way, that physician or provider networks undertaking such programs can achieve significant efficiencies in terms of either quality improvement or cost containment, or that have identified the conditions or circumstances under which they are likely to do so. 6. Conclusion Regarding Integration and Potential to Achieve Significant Efficiencies Overall, it appears that TriState’s proposed program is both intended and structured so as to be likely to create substantial integration among its participating providers, particularly its member physicians, in the provision of medical and other health care services. Operation of the program, as proposed, will involve a significant degree of participation by, and interaction among, many or most of the physician members of TriState regarding the services provided by each member under the program, and the group as a whole. Member physicians will no longer provide their professional services without a significant amount of reporting, observation, oversight, review, evaluation, and, if appropriate, intervention by their peers to assure that practices conform with evidence-based medicine “best practices.” This integration among the participating physicians in the program, in turn, appears to have the potential to result in significant efficiencies, both in terms of cost and quality, in the delivery of medical services to patients covered under payer contracts for the program. Moreover, it appears that achievement of those efficiencies, if it45 occurs, will be the result of the joint activities and infrastructure that TriState makes possible, and which could not occur absent the TriState participants’ acting jointly and integrating their provision of services through the proposed program.
Letter to Christi J. Braun April 13, 2009 Page 24 Citing Polk Bros., Inc. v. Forest City Enterprises, Inc, 776 F.2d 185, 189 (7 Cir. 1985). th 46 C. Need and Justification for Joint Pricing and Collective Negotiation of Payer Contracts We have concluded, as discussed above, that TriState’s proposed program appears likely to involve substantial integration by its physician participants that appears to have the potential to achieve significant efficiencies in the physicians’ performance and the care of patients covered by the program. We now consider whether the joint pricing of its physician members’ services and collective negotiation of contracts with payers, are “ancillary” to – that is, related and subordinate to, and reasonably necessary to further – that integration and the proposed program’s ability to achieve integrative efficiencies. Accordingly, we turn to TriState’s explanations of why it believes that its program’s competitive restraints are ancillary to the integration and achievement of efficiencies, and therefore warrant a more detailed inquiry into their likely competitive effects under the antitrust rule of reason. 1. TriState’s Proffered Justifications for Joint Contracting You state TriState’s primary argument as to the need to jointly contract with payers for the proposed program as follows: For TriState to integrate its members’ services with the quality improvement measures and medical management, it is important for all TriState physicians to participate, and be included, in the contracted network. . . . The success of Tristate’s program depends significantly on its physicians participating in all its contracts. The only way to ensure that all TriState physicians participate in all TriState payer contracts is for TriState to negotiate payer contracts for its complete network and prohibit its members from “opting out” of its contracts. No other contracting methodology will ensure full participation. You go on to identify several reasons why you believe that full participation of all TriState physicians in all payer contracts is reasonably necessary to the program’s success, and how joint contracting on behalf of all physicians for all contracts will be “part of a larger endeavor whose success they [the restraint(s)] promote.”46 First, you argue that, in order to effectively integrate the program’s quality improvement initiatives and medical management services into the physicians’ practices, it is necessary to maximize the number of patients in each physician’s practice subject to those practice requirements. Each . . . patient is an opportunity for the physicians to collaboratively treat a patient, integrate guidelines and protocols into their practices, use the Clinical Claims Chart, and incorporate medical management into their practices. The more
Letter to Christi J. Braun April 13, 2009 Page 25 In this regard, as noted previously, you have stated that TriState intends to seek to have included in all payer 47 contracts a tiered coverage provision that rewards patients in terms of lower deductibles and co-payments for staying within the TriState provider network for their care. TriState physicians engage in integrative activities, the more interdependent they become, increasing the likelihood they will achieve the anticipated cost and quality efficiencies. Thus, in addition to assuring that more patients will be subject to the potential quality and efficiency benefits of the program than would be the case if not every physician was a part of every payer contract, you assert that maximizing the physicians’ activity under the constraints of the program will accustom the physicians to the program’s system of integrating care, and maximize its effective operation. Next, you assert that having all physicians in the program for all payer contracts and enrollees will reinforce the in-network referral requirement, again maximizing the potential effectiveness of the program, both in the provision of services and in the program’s ability to obtain data and monitor both physician performance and patient treatment and status. “[E]ach time a TriState patient goes out of network, TriState loses an opportunity to gather information for the Clinical Claims Chart, to ensure [that] physicians have an accurate record of care, to improve the health of that patient, and to control the costs of that patient’s care.”47 You then argue that having all physicians in all payer contracts will provide greater incentive for those participating physicians to contribute their time and effort in developing and implementing the program than would be the case if physicians had less involvement due to participation in only a subset of contracts for the program. You state that “[w]ithout the physicians’ investment of time in developing and implementing the clinical integration strategy, there will be no integrated product for TriState to sell,” and note that physician participation in the program involves a range of activities such as “reviewing guidelines, developing protocols, teaching their peers about the guidelines and protocols, monitoring their peers’ quality, developing medical management policies, reviewing prescription drug literature, or developing and maintaining a drug formulary.” We understand this argument, in essence, to be that if physicians are not required to participate in all payer contracts, which will result from joint contracting with payers, their patient volume under the program may be too small for them to care sufficiently and devote the necessary time and effort toward its operation and success. Finally, you make some more purely business-related justifications for joint contracting. You state that joint contracting allows TriState to offer a network of providers that is readily identifiable by payers and their subscribers in seeking services covered by the program. It also provides transaction costs efficiencies for payers in avoiding the need for individual provider contracts with each physician, as well as reducing TriState’s administrative costs and burden, which would be considerably greater if different subsets of its physicians were participating under each payer contract.
Letter to Christi J. Braun April 13, 2009 Page 26 As likely would occur if TriState, for example, used a “messenger” arrangement to convey each payer offer to 48 it physician members, who then individually would decide whether or not to participate in each payer contract. 2. Analysis of TriState’s Ancillarity Arguments TriState’s primary argument of the reasonable necessity of joint contracting on behalf of all of its physicians, in essence, is two sides of the same coin: that not having all member physicians participating under all contracts would seriously undermine the ability of the program to function efficiently and achieve its hoped-for benefits; and that the various aspects of the proposed program, which require physicians to cooperate and interact in both their development and implementation, will be far more effective if all physicians are maximally involved because, through joint contracting, they are participating in all payer contracts under the program. Without joint contracting, which will assure, and reinforce, TriState’s membership requirement, that all physicians participate under all contracts, TriState potentially could have different provider panels representing a subset of its membership for each payer contract. This, in turn,48 could make it difficult to effectively maintain the in-network referral requirement, since referring physicians might have to use different physicians for referrals under each contract. Likewise, with varying provider panels for each contract, the ability of TriState to coordinate the care provided to patients, and its ability to obtain information on both patients and providers would be more difficult and the results less robust. Reduced information on provider behavior could interfere with the program’s evaluation of, and feedback regarding, physicians’ practices in treating patients, again undermining a key component of the program’s effort to improve efficiency. Thus, while it might be theoretically possible to have a program without joint contracting on behalf of all physicians in the program, such an approach appears likely to be far more difficult, and potentially could compromise TriState’s ability to effectively integrate its physician members’ provision of care, and to achieve the program’s potential efficiencies. On the positive side, uniform participation will facilitate the program’s in-network referral requirement, which is central to the program’s success in rationalizing and effectively providing evidence-based care to the program’s enrollees. With a stable, defined network of participating providers, physicians will easily be able to make referrals to other network physicians, knowing that they also will be participating in the provision of coordinated care under the program’s strictures. Likewise, maintaining a pre-set network makes it easier to assure that data and information on patient treatment and provider activity and use of resources – necessary for monitoring patient status and physician behavior, as well as the program’s achievement of its efficiency goals – is available to the greatest extent possible. As noted above, achieving these operational necessities would be far more difficult if different physicians were participating in different payer contracts, referral patterns had to be adjusted accordingly to keep patients within the applicable network, and information on patient treatments and provider behavior were less uniformly available.
Letter to Christi J. Braun April 13, 2009 Page 27 See, e.g., Statement 8 of the Health Care Statements at § B.2. (observing that while a physician network 49 generally is likely to achieve more significant efficiencies from the integration of its participants, “the Agencies will consider [as efficiencies] a broad range of possible cost savings, including . . . economies of scale, and reduced administrative or transaction costs.”). However, such “efficiencies,” in the absence of integration, occur in any cartel, and alone do not justify rule-of-reason treatment of a price agreement. See Competitor Collaboration Guidelines at § 3.2 (“The mere coordination of decisions on price, output, customers, territories, and the like is not integration, and cost savings without integration are not a basis for avoiding per se condemnation.”). Having complete provider participation as a result of joint contracting on their behalf also will maximize the number of patients each physician has that are subject to the program’s various efficiency-enhancing mechanisms, thereby increasing the physicians’ familiarity with, acceptance of, and efficient participation in those program aspects and requirements. In essence, the more physicians participate in the program, the faster they are likely to climb the learning curve in effectively treating patients under the clinical integration system and its required components. Guaranteed uniform participation by all physicians under all contracts, through joint contracting, also is likely to contribute to the physicians’ commitment to the success of the program. The greater the number of patients that a physician has who are under the proposed program, the more he or she is likely to care about its operation and success, and the greater is likely to be the physician’s willingness to invest the necessary time and effort in the various aspects of its operation. Joint contracting on behalf of all TriState physicians will maximize each physician’s opportunities to treat patients who are covered by the program which, in turn, should make them more committed to the program’s success. Having a stable provider network for all contracts also appears capable of enhancing TriState’s effective business operations by helping to “brand” its product, and identify the program as a single entity with a stable provider panel and a reputation regarding its product, much like the way more highly integrated clinics are identified in the public’s mind. Joint contracting also can reduce administrative costs for the program, and reduce transaction costs for both its members and payers with which it contracts. Administrative and transaction costs efficiencies, by themselves, are unlikely to be of sufficient magnitude to offset the loss of competition from joint negotiation of prices by physicians in a provider network. Nevertheless, these types of efficiencies may be real, and are cognizable under the antitrust laws in the context of an integrated joint venture.49 We agree that having a predetermined, identified provider network for all services provided pursuant to contracts with payers for the proposed program appears likely to promote the program’s intended integration of its physician members’ provision of care, and the efficient operation of the various aspects of the proposed program. It also may help in the effective branding and marketing of the program. Increased physician participation and interaction, in turn, should further TriState’s ability to achieve the program’s anticipated efficiency benefits. Moreover, without such joint contracting on behalf of all member physicians, effective operation of TriState’s proposed program is likely to be far more difficult and its effectiveness could well
Letter to Christi J. Braun April 13, 2009 Page 28 TriState’s justification for what otherwise would appear to be an anticompetitive and unlawful price 50 agreement among its physician members rests on the proposed program’s procompetitive potential to achieve efficiency benefits as a result of the participants’ integration through the program. If, however, the proposed program ultimately were to fail to achieve significant integrative efficiencies, the anticompetitive effects of the program would likely dominate. A prospective assessment of the program thus does not ensure its legality for all time, and the Competitor Collaboration Guidelines make clear that assessment of the competitive effects of a joint venture is an ongoing process that occurs over the life of the venture: The competitive effects of a relevant agreement may change over time . . . . The Agencies assess the competitive effects of a relevant agreement as of the time of possible harm to competition, whether at formation of the collaboration or at a later time, as appropriate. However, an assessment after a collaboration has been formed is sensitive to the reasonable expectations of participants whose significant sunk cost investments in reliance on the relevant agreement were made before it became anticompetitive. Competitor Collaboration Guidelines at § 2.4. Thus, absent the realization of significant efficiencies at some point, it might be difficult to sustain the justification that the arrangement’s competitive restraints are necessary to achieve such efficiencies, and that the arrangement, overall, is not anticompetitive as a result of those restraints. W e are not in a position to specify prospectively when those efficiencies must be achieved, or what level of efficiencies would be “significant.” The best judges of that are likely to be TriState’s customers “voting with their feet” if the program fails to achieve acceptable results within what they view as a reasonable period of time. If payers at some future date conclude that the program does not provide sufficient value, and decline to contract for it with TriState, this might signal the need for a prospective reassessment of the overall competitive effects of the program. However, absent the exercise of market power by the program or its participants, the market itself is likely to effectively address any competitive concerns that such a situation might raise. be compromised. Overall, such joint contracting appears to be subordinate to TriState’s legitimate effort to improve efficiency and quality in the delivery of healthcare services through integration by its participants. We therefore conclude that, on balance, joint contracting with payers by TriState on behalf of its entire participating physician membership is an ancillary restraint – one that is subordinate to, and reasonably necessary to further or make more effective the potentially efficiency-enhancing and procompetitive integration that the proposed program represents.50 D. Likely Competitive Effects of TriState’s Proposed Program 1. TriState’s Position and Available Alternatives in the Market We have not done an investigation or formal market analysis to define relevant geographic and product markets within which TriState and its physician and hospital members compete. Rather, our consideration of the likelihood that TriState would be capable of exercising market power in the sale of those services under the proposed program, or that the proposed program otherwise
Letter to Christi J. Braun April 13, 2009 Page 29 The Health Care Statements note that “a variety of factors may tend to corroborate a network’s 51 anticompetitive nature, including: statements evidencing anticompetitive purpose; a recent history of anticompetitive behavior or collusion in the market, including efforts to obstruct or undermine the development of managed care; obvious anticompetitive structure of the network (e.g., a network comprising a very high percentage of local area physicians, whose participation in the network is exclusive, without any plausible business or efficiency justification); the absence of any mechanisms with the potential for generating significant efficiencies or otherwise increasing competition through the network; the presence of anticompetitive collateral agreements; and the absence of mechanisms to prevent the network’s operation from having anticompetitive spillover effects outside the network.” Health Care Statements at Statement 8, § B.1. TriState physicians represent half or more of the physicians with admitting privileges in anesthesiology, 52 cardiology, family medicine, internal medicine, nuclear medicine, obstetrics/gynecology, oral and maxillofacial surgery, orthopedics, pediatrics, physical medicine, plastic surgery, podiatry, radiation oncology, and radiology. TriState physicians comprise 100 percent of physicians with privileges at the hospital in the specialties of allergy, endocrinology, gastroenterology, infectious disease, neurosurgery, hematology/oncology, otolaryngology, pain management, and pathology. TriState notes that in many specialties the high percentages are the result of there being very few practitioners in the specialty that practice in the area, so that a relatively small number of TriState member physicians nevertheless may represent a significant percentage of area physicians in a particular specialty. A similar concern about the network including relatively high percentages of area physicians in certain 53 specialties was raised in the MedSouth advisory opinion letter. See Letter from Jeffrey W . Brennan, Assistant Director, Health Care Services and Products, Bureau of Competition, Federal Trade Commission, to John J. Miles at 6 (Feb. 19, 2002), available at http://www.ftc.gov/bc/adops/medsouth.shtm. might result in anticompetitive effects, is based solely on the information that you have provided51 to us. a. Physician Services You state that TriState currently has 212 physician members who are expected to participate in the proposed program. While you represent that there are about 1,200 physicians in TriState’s secondary service area, TriState physicians apparently represent a much higher percentage of the physicians within its primary service area – essentially Washington County, Maryland, which accounts for over 80 percent of admissions at Washington County Hospital. In fact, you state that TriState physicians comprise 64 percent of Washington County Hospital’s medical staff, and half or more of the physicians in a large number of specialties in TriState’s and the hospital’s primary service area that have admitting privileges at the hospital. Thus, TriState, as a combination of a52 substantial portion of the physicians in Washington County with privileges at the only hospital in that county, appears to have the potential to exercise market power in the sale of its member physicians’ services. This concern arises regarding the proposed program since, unlike53 TriState’s current contracts, in which its physician members deal individually with InforMed and other payers regarding price and related contract terms of their participation in those networks and programs, TriState will be jointly contracting on behalf of its competing physician members under the proposed program, including negotiating and agreeing regarding the prices to be charged for those physicians’ services under the program.
Letter to Christi J. Braun April 13, 2009 Page 30 This contrasts with the situation faced by the proposed network arrangement by the Greater Rochester 54 Independent Practice Association (GRIPA), where other large provider networks appeared to be available to payers as alternatives to GRIPA. See Letter from Markus H. Meier, Assistant Director, Bureau of Competition, Health Care Division, Federal Trade Commission to Christi J. Braun, Esquire, and John J. Miles, Esquire at 25-26 (of Sep. 17, 2007), available at http://www.ftc.gov/bc/adops/gripa.pdf. For a discussion of the Agencies’ approach to determining the exclusivity or non-exclusivity of physicians’ 55 participation in a network joint venture, including an enumeration of several “indicia of non-exclusivity” that may weigh in that assessment, see Health Care Statements at Statement 8, § A.3. See also Id. at Statement 9, § B.2.b. You state that TriState “has not tied, and will not tie, hospital services and physician services in contracting 56 with customers. W CHA also will not tie the sale of its hospital services to payers’ purchasing [TriState’s] physician services. . . . W CHA will not force any payer to buy [TriState’s] clinically integrated product by conditioning the sale of W CHA’s hospital services on the payer contracting with [TriState].” You also state that “[t]here are no IPAs or PHOs other than TriState operating within Washington County,” and it therefore is not clear that there are any competitively reasonable alternatives to TriState available to payers in TriState’s primary service area. Your submission mentions54 InforMed’s “regional” network and certain networks used by some large private payers, which apparently cover a much broader area than just Washington County, as well as other providers operating within TriState’s secondary service area. You, however, provide little information about these networks or providers, and it is not obvious that they represent realistic or practical alternatives to TriState and its members for payers to offer to their beneficiaries in order to obtain health care services within TriState’s primary service area. A potential concern may arise where a network’s provider panel is over-inclusive – for example, comprising significantly more total physicians or physicians in particular medical specialties than is necessary for it to provide services effectively to its likely customers. Such over-inclusiveness may make it more difficult for, and lessen the likelihood that, other, potentially competing networks and programs will develop in the area. We are not in a position to do a detailed specialty-by-specialty assessment of TriState’s provider needs, and none was provided to us. Nevertheless, TriState’s non-urban geographic location and the limited total number of physicians in its primary service area, combined with the fairly modest absolute numbers of member physicians and physician practices in each specialty area, suggest that TriState’s physician network may not be over-inclusive. This view is supported by TriState’s historical operation, where its largest customer – the Washington County Health System, Inc., health plan – essentially required TriState to add a significant number of “contracting physicians” to supplement its provider panel of physician members. TriState attempts to address these potential competitive concerns by providing assurances that its proposed program will be non-exclusive, “both de jure and de facto,” and that payers who do55 not wish to contract for the proposed program will be able to contract individually with TriState’s member physicians, as well as with Washington County Hospital, as they currently do. While56 TriState will inform payers and its members of this non-exclusivity, and will counsel its members
Letter to Christi J. Braun April 13, 2009 Page 31 The MedSouth advisory opinion raised similar concerns about possible anticompetitive effects – both in 57 terms of physician participants not dealing individually with payers and regarding possible “spillover” price effects – potentially resulting from that program’s having high percentages of available physicians in certain specialties, despite the program’s “explicit policy of ‘nonexclusivity’.” The opinion letter noted that, despite the claimed non- exclusivity: MedSouth members may have the incentive and the ability to agree not to contract independently of the venture. They have incentives to seek higher fees to recoup their investments in developing and implementing the proposed program. Negotiation of fee-for-service rates for the group will involve identification of price levels that could become the focal point for collusion on individual contracts. To the extent that the program creates greater communication and interdependence among the doctors, the easier it likely would be for them to coordinate their activities. Particularly in light of the doctors’ existing referral arrangements, MedSouth members may be able to discipline members of the IPA who might be inclined to break ranks and contract independently. The letter went on to state, however, that: [w]e cannot conclude with certainty that MedSouth’s physicians actually will contract outside the IPA; nor can we conclude . . . that MedSouth’s operation will restrict competition unreasonably . . . W e assume for purposes of this advisory opinion that your representations regarding the availability of MedSouth members to contract individually with health plans at competitive rates is accurate and will be borne out by the members’ actual conduct. In considering the blanket license arrangement in Broadcast Music, the Supreme Court noted that “[t]he 58 District Court found that there was no legal, practical, or conspiratorial impediment to . . . [customers] obtaining individual licenses [to use individual compositions]; . . . [customers], in short, had a real choice.” 441 U.S. at 24. Assuming that TriState, in fact, operates in a truly non-exclusive fashion, payers likewise should have the option to purchase the services of individual TriState member physicians without having to deal through TriState. about antitrust concerns regarding agreements to refuse to deal, it cannot guarantee that its members individually will decide to accept a payer’s contract offer, or that payers choosing not to contract for TriState’s proposed program will be able to secure an adequate physician network through such individual dealings, or obtain those services at prices that are not above market- determined levels as a result of the physicians’ interaction through the joint venture.57 A payer’s inability to obtain an adequate provider network through individual contracts, by itself, normally would not raise antitrust concerns where it was clear that this was the result of individual decisions by each provider as to the terms on which the provider was willing to deal with a payer. In the present circumstance, however, with TriState negotiating collectively on behalf of all of its members, and with TriState physicians representing a very significant percentage of both the total number of physicians and of those in several specialty areas within TriState’s primary service area, the inability of a payer to attract sufficient individual TriState member physicians to contract outside of TriState likely would at least raise serious questions requiring further investigation and clarification. Consequently, non-exclusivity in practice is of58 critical importance to our conclusion that TriState’s proposed program is unlikely to create or allow it to exercise market power on behalf of its member participants, or to result in anticompetitive market effects.
Letter to Christi J. Braun April 13, 2009 Page 32 Because of the ownership of numerous other related medical and health care providers and services by 59 W ashington County Hospital’s parent organization – W ashington County Health System, Inc. – W ashington County Hospital may have, or be able to exercise, some degree of market power regarding health care services beyond just hospital services, as well. See n. 6, supra. Health Care Statements at Statement 9, § B.2.b. 60 See discussion in Section IV.D.3, infra, re physician complaints regarding the proposed program. 61 b. Effect of Washington County Hospital’s Involvement on Competition Regarding Physician Services, Hospital Services, and Related Services As a physician-hospital organization, TriState and its proposed program involves the participation by Washington County Hospital. One possible competitive concern about this involvement is that the hospital – which is the only hospital in the primary service area served by TriState, and therefore likely possesses a degree of market power regarding hospital services – could act in ways that adversely affected competition for physician services in that area. A “monopoly”59 hospital’s involvement also could affect competition for related services provided by the hospital, but for which there are, or might be, competitive alternatives available. These types of competitive concerns are identified in the Health Care Statements’ discussion of multiprovider networks: If there is only one hospital in the market, a multiprovider network by definition, cannot reduce any existing competition among hospitals. Such a network could, however, reduce competition among other providers, for example among physicians in the network and, thereby, reduce the ability of payers to control the costs of both physician and hospital services [for example, by aligning itself with a large share of physicians in the market, a monopoly hospital may effectively be able to insulate itself from payer efforts to control utilization of its services and thus protect its monopoly profits]. It also could reduce competition between the hospital and non-hospital providers of certain services, such as outpatient surgery.60 The latter concern is one that you acknowledge may be present in TriState’s case. You note that many private physicians who have been expanding into the provision of outpatient services and seeking new business opportunities view the hospital as a competitor, and this is a particular source of tension insofar as Washington County Health System, Inc., insists that the care for which it pays for its health plan enrollees be provided within the Washington County Health System, Inc., including Washington County Hospital.61 While you have assured us that Washington County Hospital will continue to contract directly with payers independently of the proposed program where payers so prefer, this could be an area
Letter to Christi J. Braun April 13, 2009 Page 33 The Supreme Court, in Broadcast Music, alluded to this type of “spillover” concern through possible 62 anticompetitive agreements by the participants in the blanket license arrangement regarding the sale of their individual compositions outside the joint venture, but found no evidence of the existence of any such agreements. 441 U.S. at 23-24. See discussion of “spillover effects” in Health Care Statements at Statement 8, § B.2. 63 of serious concern if the providers’ relationship through TriState were to be used strategically to benefit either the physician participants or the hospital by reducing or eliminating competition that otherwise would exist in the absence of the participants’ agreement through the joint venture. Despite these concerns, it appears that if TriState operates as it has proposed, payers unwilling to contract jointly with physicians through TriState nevertheless should be able to deal individually, or perhaps through other regional networks, in order to obtain the services of some or all of TriState’s physicians and hospital member at rates that are not artificially elevated due to the providers’ coming together through the proposed program. If so, it is not apparent how TriState’s proposed program would facilitate it or its physician members attaining or exercising market power or otherwise having anticompetitive effects in the market for physician services. Likewise, it is not apparent how TriState’s proposed program would enhance Washington County Health System, Inc.’s already existing leverage to insist that patients covered under its employee health benefits program be treated within its own system, a current policy that predates the proposed program. Consequently, it is not clear that its participation in the proposed program is likely to harm competition or increase Washington County Health System, Inc.’s, market power beyond that which it already possesses. Should it, however, become apparent that TriState and its physician members in fact are not operating on a non-exclusive basis, that payers are unable to obtain access to physician services needed for their programs outside of TriState and at market-determined rates, or that TriState is being used strategically to undermine actual or potential competition for services provided by Washington County Health System, Inc., our initial view of TriState’s market power and the proposed program’s likely competitive effects would require reassessment. Under those circumstances, we might rescind this advisory opinion, and might recommend that the Commission institute appropriate law enforcement activity to remedy any anticompetitive conduct. 2. “Spillover” Price Effects Another area of potential concern with a physician network relates to possible “spillover” effects on pricing by member physicians of their medical services sold outside the network. The62 competitive analysis of a network considers whether the arrangement is likely to facilitate collusion, either overt or tacit, regarding activities by the participants outside the network. For63 example, agreement by TriState physicians as to the fees they will charge outside of TriState, or
Letter to Christi J. Braun April 13, 2009 Page 34 In discussing possible anticompetitive “spillover” effects, the Health Care Statements observe that “a 64 network that uses an outside agent to collect and analyze fee data from physicians for use in developing the network’s fee schedule, and avoids the sharing of such sensitive information among the network’s physician participants, may reduce concerns that the information could be used by the network’s physician participants to set prices for services they provide outside the network.” See Statement 8 at § B.2. W hile not technically an “outside agent,” TriState’s proposed use of non-physician staff to survey its physicians, coupled with its other precautions to prevent that information from being conveyed to the physicians, may be adequate to achieve essentially the same result, if the proposed protections are adhered to rigorously. any agreement only to deal with payers outside of TriState on collectively-determined terms, would raise antitrust concerns. We therefore would have serious concerns if the proposed program’s operation facilitated any such agreements among its physicians in selling their services outside of TriState’s proposed program. TriState says that it will “take steps to prevent any anticompetitive spillover.” Specifically, TriState “will limit its members’ access to competitively sensitive information;” “will provide antitrust counseling to members of the committees responsible for dealing with competitively sensitive information, and antitrust guidelines to its members;” and “will require all board and committee members to sign confidentiality agreements and will use those agreements to enforce its confidentiality policy, which prohibits the disclosure of competitively sensitive information.” When developing its fee schedule, a non-physician TriState staff person will survey the members’ practices, and only non-physician staff will see actual physician prices. After aggregating this64 information, the staff will destroy the information records from individual practices. Once a contract is in place, physicians overseeing the program’s operation will “have access only to cost, not pricing, information as they perform utilization, quality, and cost-effectiveness reviews. TriState will make every effort to limit the competitively sensitive information reviewed by its committees.” Finally, TriState’s committee and board members “will receive antitrust counseling to keep competitively sensitive information confidential, not to use TriState’s information for any business they conduct outside TriState, and not to discuss or exchange their own prices or competitive terms.” Any board or committee member who breaches a signed confidentiality agreement will be removed from the committee or board. One possible type of spillover effect that is not dependent on sharing of competitively sensitive information among competing physicians is that TriState physicians individually might seek to charge the potentially higher prices they receive for their services through the jointly negotiated contracts under the proposed program even when providing services outside of that program, without the quality and efficiency enhancements provided through the program’s integrative aspects. This form of spillover would involve individual member physicians using the information they each necessarily would obtain about the program’s negotiated reimbursement levels for their individual services (as evidenced by their payments under the program) in dealing with payers outside of the program. The concern would be that this information could influence the prices at which the physicians would offer their services outside the program, and potentially could allow some TriState physicians, particularly those practicing in specialty areas where there are few alternative providers in the area, to obtain higher fees from payers.
Letter to Christi J. Braun April 13, 2009 Page 35 While higher prices certainly are a concern, physicians generally know the payment levels they receive from various payers for their individual services, and presumably price their services as the market permits (or demands, in the case of certain government programs). Having information on their individual payment levels from payers under the proposed program would be no different from the type of information that they currently have from all other payers under all programs in which they participate. Payers would remain free to accept or reject those terms to the same extent that they currently are able, and any ability of particular TriState physicians to individually obtain higher fees outside of TriState would appear to be the result of supply and demand or other factors unrelated to TriState’s operation. However, we would be greatly concerned if activity in the market suggested the possibility of coordinated interaction – either explicit or tacit – among TriState physicians regarding their dealings outside of TriState. This could become apparent if payers were unable to contract with physicians outside of TriState at market rates, which presumably would be lower than the TriState rates, since the latter would be based on the additional integrated systems, services, and value that the program promises to provide. 3. Competitive Concerns Expressed by Some Area Physicians We received several letters from physicians who participate in TriState’s existing programs, but who expressed concern that if TriState’s proposed program were to receive a favorable opinion and proceed to operate, it would allow Washington County Hospital Association and its affiliates/subsidiaries “to gain such a great market share or monopoly on the privately insured patients of Western Maryland that all other competition would be effectively eliminated.” The proposed program, they asserted, would create great potential for the PHO [i.e., TriState to] . . . control the majority of private insurance eligible patients in [the] . . . region thus leading to marked decrease in competition, the potential manipulation of reimbursement fees to favor [the hospital and its subsidiaries] . . . with the potential reduction in appropriate physician fees and the inability of physicians to adequately respond to these reductions due to the monopoly situation that would be created. This would certainly result in the diminution of services to the . . . people of the Washington County area, less efficient and less prompt service. The letters and other accompanying memoranda submitted by the physicians raising concerns did not, however, explain how operation of TriState’s proposed program would have these effects. As best we can ascertain from the submission, these physicians are concerned about the degree of market power they believe is already possessed by Washington County Hospital Association through operation of its subsidiaries, Washington County Hospital, TriState, and Antietam Health Services, and fear that TriState’s proposed program would add to Washington County Hospital Association’s market power, to the disadvantage of physicians who do not affiliate with Washington County Hospital Association and its programs. The materials they submitted also
Letter to Christi J. Braun April 13, 2009 Page 36 To the extent that Washington County Hospital Association, including its parent organization, subsidiaries, 65 and affiliates, already may have market power or be a monopolist within a relevant geographic and product market, any activity by it to increase or maintain such market power by means other than competition on the merits – including through strategic use of its participation in TriState and its proposed program – could raise antitrust concerns. See n. 52, supra. 66 indicate a concern that Washington County Hospital Association will use its market power to essentially require use by all area physicians of Washington County Hospital Association’s health care facilities and capabilities, thereby making it impossible for independent practices to establish or successfully operate alternative outpatient services. It is not evident, nor do the physicians’ letters explain, how operation of TriState’s proposed program would increase any market power that Washington County Hospital Association may already have due to its current position as the only hospital in Washington County or its ownership of certain primary care and other physician practices in the region. TriState’s commitment to non-exclusive contracting with payers under the proposed program should allow payers to deal with any area providers, on an individual basis and without going through TriState, should the payers prefer to do so. Likewise, TriState has stated that access to hospital services from Washington County Hospital Association will not be tied to, or conditioned on, the purchase of physician services through TriState. While it therefore is not apparent how the concerns expressed by these physicians would result from the proposed program or Washington County Hospital Association’s involvement, as we have stated generally regarding the program, we would be greatly concerned if the program or the hospital’s involvement somehow were to be used strategically, in order to increase Washington County Hospital Association’s power in any area of the health care services market, or to otherwise disadvantage competitors or unfairly foreclose competition that otherwise might exist or develop in the market. This could be of particular concern given that TriState physicians65 comprise 64 percent of Washington County Hospital’s medical staff, and half or more of the physicians in a large number of specialities with admitting privileges at the hospital.66 V. Conclusion TriState’s proposed program, while still in the relatively early stages of development in certain respects, nevertheless appears to involve substantial integration by its physician participants that has the potential to result in the achievement of significant efficiencies that may benefit consumers if it is implemented as you have described. It also appears that TriState’s joint negotiation of contracts, including price terms, with payers on behalf of its physician members who will be providing medical services to the payers’ enrollees under those contracts is subordinate and reasonably related to TriState’s members’ potentially procompetitive integration
Letter to Christi J. Braun April 13, 2009 Page 37 In Broadcast Music the Supreme Court observed that per se condemnation of apparently anticompetitive 67 conduct first requires an inquiry focusing on “whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output . . . or instead one designed to ‘increase economic efficiency and render markets more, rather than less, competitive’.” 441 U.S. at 19-20 (quoting United States v. United States Gypsum Co., 438 U.S. 422, 441 n. 16 (1978)). through the proposed program, and appears reasonably necessary to achieve the potential efficiencies of that program. Because of the procompetitive potential of the proposed program, the apparent ancillarity of its joint contracting to furthering achievement of the program’s potential efficiencies, and the indications that, if operated as you have proposed, TriState is unlikely to be able to attain, increase, or exercise market power for itself or its participants as a result of implementing the proposed program, we do not believe that the proposed program’s operation should be summarily condemned ab initio under prevailing antitrust law standards. We therefore would not67 recommend that the Commission challenge TriState’s proposed program unless it became apparent that TriState in fact was able to increase or exercise its participants’ market power, or otherwise have an anticompetitive effect in a relevant market. Because of TriState’s interrelationship with Washington County Hospital Association, we also would be concerned if TriState or the proposed program, were used in a way that unfairly eliminated or restricted competition for the services provided by Washington County Hospital Association and its subsidiaries, divisions, or affiliates. This letter sets out the views of the staff of the Bureau of Competition, as authorized by the Commission’s Rules of Practice. Under Commission Rule § 1.3(c), 16 C.F.R. § 1.3(c), the Commission is not bound by this staff opinion, and reserves the right to rescind it at a later time. In addition, this office retains the right to reconsider the questions involved and, with notice to the requesting party, to rescind or revoke the opinion if implementation of the proposed program results in substantial anticompetitive effects, if the program is used for improper purposes, if facts change significantly, or if it otherwise would be in the public interest to do so. Sincerely, Markus H. Meier Assistant Director
OBERIKALERA Professional Corporation
Dber. Kaler. GrimBS & Shriver
Attorneys at law
1401 HStreet. NW, Suite 500
Washington, DC 20005·3324
202·408·8400 Fax 202·40B'()640
www.ober.com
Mr. Donald S. Clark
Secretary
Federal Trade Commission
Room 172
600 Pennsylvania Avenue. N.W.
Washington, D.C. 20580
Dear Mr. Clark:
July 9, 2007
Christi J. Braun
cjbfaun@ober.com
202·326·5046
Offices In
Maryland
Washington. D.C.
Virginia
Pursuant to Federal Trade Commission Procedure Rules 1.1 through 1.4, 16 C.F.R.
§§ 1.1-1.4 (2007), TriState Health Partners, Inc. ("TriState") requests a staff advisory
opinion. Recognizing the need of area employers to control health care expenses and
ensure optimal care for employees and beneficiaries, TriState proposes to develop a non-
exclusive multi-provider network joint venture that will integrate its members clinically as
described in Statements 8 and 9 of the U.S. Department of Justice and Federal Trade
Commission Statements of Antitrust Enforcement Policy in Health Care (1996)
(,'Statements"). I If TriState develops contract proposals that include performance bonuses,
negotiates contract terms (including price), and enters into contracts with third-party payers
for the sale of the integrated product described in this letter, what are the Commission's
enforcement intentions and how would it analyze those activities under Section 5(a)(1) of
the Federal Trade Commission Act?
TriState is a non-exclusive physician-hospital organization ("PHD") whose
approximately 200 practitioner and one hospital system members' are located in
Washington County, Maryland and provide medical services to patients from Maryland,
Pennsylvania, and West Virginia. Originally marketing its integrated product to the local
business community, TriState intends to offer payers a network of primary care and
specialist physicians whose services will be integrated through a formal and stringent
medical management program that includes protocol development and implementation,
performance reporting, procedures for corrective action when necessary, and aggressive
management of high-cost, high-risk patients. The program will offer payers a network of
I To maximize potential efficiencies, TriState intends to align the financial incentives of the joint venture
partners, and further establish the interdependence of its practitioner members, through pay-for-perfonnance
("P4P") risk agreements with payers. The amount of the risk funds, however, will be detennined through
negotiations with payers, and TriState cannot say at this time whether the financial risk sharing through its
P4P contracts will qualify as "substantial," as that tenn is used in the Statements.
OBERIKALE:R.A prureJ$~f\81 Co{poratalo
Mr. Donald S. Clark
July 9, 2007
Page 2
coordinated services from physicians committed to improving outcomes by working
together to achieve quality improvements not possible by working independently.
TriState's physicians will actively collaborate in the development of all facets of the
program, ensuring the cooperative delivery ofhigh-quaIity, cost-effective care.
I. TriState
A. Members
TriState, which is based in Hagerstown, Maryland, is a Maryland non-stock,
membership organization that incorporated in June 1995. It has two classes of
membership.2 Class I members are primary care physicians ("PCPS"),3 specialty care
physicians ("SCPs"), hospital-based physicians, or oral surgeons licensed to practice in
Maryland, or medical group practices whose physicians or surgeons meet that
requirement.4 The sole Class II member is Washington County Hospital ("WCH"), a
member of the Washington County Health System, Inc. ("WCHSI"), located in
Hagerstown.
1. Practitioners
To join TriState, physicians or oral surgeons (collectively "practitioners'') must
complete a written application for membership, meet TriState's credentialing criteria, and
be approved by the TriState Board. TriState has no restrictions on the addition of new
Class I members. Each new Class I member pays ajoining fee of $2,500, which WCH
matches.
There are currently 204 Class I physician members, 64 of which are PCPs
practicing in the specialties of family practice, internal medicine, and pediatrics. The
remaining members are SCPs who practice in 29 specialties.
2 See Exhibit 1, TriState's Bylaws.
3 TriState defines PCPs as those physicians who specialize in family practice, pediatrics, general practice or
internal medicine (excluding its subspecialties).
~ Approximately 17 percent of TriState members are employees of Washington County Health System, Inc.,
through its subsidiaries Washington County Hospital Association and Antietam Health Services (a for-profit
corporation), or Antietam's subsidiary Medical Practices of Antietam, LLC. These employed phYSicians
must comply with all of TriState's clinical integration policies and rules, and they are subject to discipline
deemed appropriate by their TriState peer physicians, including expulsion from TriState.
OBERIKALERA PrDfe.sstONii COqxNlIIJgn Mr. Donald S. Clark July 9,2007 Page 3 SPECIALTY Allerg)'} Asthma/Immunology Anesthesio logy Cardiology Dermatology Eme~enc:x Medicine, Express Care Endocrinology Family Practice Gastroenterology General Surgery Infectious Disease Internal Medicine Primary Care Internal MedicinelPediatrics Primary Care Nephrology Neurology Neurosurgery Nuclear Medicine!Nuclear Cardiology Obstetrics/Gynecology Oncology Ophthalmology Oral & Maxillofacial Surgery Orthopedics Otolaryngology Pain Management Pathology Pediatrics Primary Care Physical Medicine/Rehabilitation Plastic Surgery Podiatry Psychiatry Pulmonary Disease Radiation Oncology Radiology Urology TOTAL wcns) EMPLOYED 0 0 0 0 0 2 9 4 t 0 5 6 0 0 0 0 5 0 0 0 0 0 0 0 0 0 0 0 3 0 0 0 0 35 17% TRISTATE MEMBERS 5 TOTAL 2 (l) 2 9 (1) 9 11 (4) 11 3 (2) 3 1 (1) 1 I (1) 3 18 (10) 27 2 (2) 6 7 (3) 8 1 (1) 1 15 (13) 20 0 6 3 (1) 3 5 (5) 5 4 (1) 4 2 (2) 2 9(4) 14 4 (2) 4 2 (2) 2 5 (2) 5 12 (3) 12 6(3 6 3 (2) 3 4 (1) 4 11 (4) II 4 (3) 4 I (1) 1 7(3) 7 0 3 5 (2) 5 1 (l) 1 10 (I) 10 I (1) 1 169 204 83% 100% Historically, TriState has elected to contract with additional providers to fill geographic or specialty-coverage gaps in the network. 6 These medical providers do not pay membership fees and have no governance rights in the PHO. Although TriState will strongly encourage these contracted practitioners to be a part of its clinical integration 5 The first numbers in the column represents the total number of TriState physicians in each specialty, and the number in parentheses represents the number of medical groups within which those physicians practice. 6 See Exhibit 2, Chart of Professionals with privileges at WCHA, WCHSI employees, TriState Members, and TriState Contracted Providers.
OBERIKALER
A Prufl!~onal Corporation
Mr. Donald S. Clark
July 9, 2007
Page 4
program, it anticipates that some may choose not to participate. For payers (most of
which are likely to be local employers) that need these non~participating providers in order
to have a complete network but do not wish to contract directly with the providers, TriState
will facilitate agreements with those providers through a messenger arrangement.
TRISTATE CONTRACTED PROVIDERS
SPECIALTY TOTAL
Emergency Medicine 3 (1)
Fami!y_ Practice 5 (3)
General Practice 2 (2)
General Surgery 1 (I)
Hospitalist 7 (1)
Infertility/Reproductive Endocrinology 1 (I)
Internal Medicine I (I)
Mental Health (non-Physician) 15
Nurse Midwives 5
OB/GYN 1 (1)
Ophthalmology 4 (2)
Oral & Maxillofacial Surgery 2 (I)
Pediatrics 4 (1)
Plastic Surgery I (1)
Psychiatry 10 (6)
Rheumatology 2 (2)
Urology 4 (1)
Wound Care 1 (1)
TOTAL 69
2. The Hospital
WCH, TriState's Class II Member, is an acute-care hospital operated by
Washington County Hospital Association ("WCHA"), a Maryland non-profit membership
corporation that is a subsidiary ofWCHSI. 7 WCH has a medical staff of 319 physicians
who practice in 58 specialties and sUbspecialties through more than 120 group practices in
Washington County and the surrounding area. WCHA is licensed to operate 292 acute
care beds, including 218 medical/surgical, 18 obstetric, 10 pediatric, 18 psychiatric, and 28
acute rehabilitation beds. Designated a Level III Trauma Center by the State of Maryland,
WCH offers a full range of adult and pediatric inpatient and outpatient services including
intensive and progressive care units, a family birthing center, mental health services,
cancer therapy, surgical care, cardiac catheterization, physical and occupational
rehabilitation, and diagnostic imaging.
7 WCHSI has approximately 3,000 employees and serves a tri-state region, including western Maryland,
southern Pennsylvania, and northern West Virginia. See Exhibit 3 for a full description of the programs and
services provided through WCHS[ and its subsidiaries.
OBERIKALER
A f'<or....",..1Cotp<>"'~O"
Mr. Donald S. Clark
July 9, 2007
Page 5
B. Organizational Structure
TriState's Board of Directors is comprised of five representatives of the Class II
member and eight Class I members (four PCPs, two surgeons, and two medical specialists,
one of which must be a hospital-based practitioner). 8 On a daily basis, an administrative
staff of eight oversees TriState's operations. 9
To facilitate the implementation of its clinical integration program, the TriState
Board left only its Nominating and Bylaws Committees unchanged and modified or
approved the addition of the following committees: 10
1. Finance-Contracting-Administration - monitors the financial performance of
TriState and develops contracting strategies and proposals, including pay-for-
performance models.
2. Communications - establishes communication and marketing strategies to
effectively reach all present and potential clients and practitioner members with
information and access to TriState, its products, services and staff.
3. Clinical Integration Oversight ("CIOC")- oversees all clinically-related
corporate activities; will establish sub-committees as deemed necessary to
conduct clinically-related activities. I I The sub-committees currently include: 12
a. Credentialing - oversees the credentialing and recredentialing processes,
including the development of participation criteria, and works closely with
the Utilization Management/Quality Assurance ("UM/QA") Committee in
evaluating the physicians' quality; solicits, evaluates and recommends
candidates for Class I membership and non-Member provider participation
status; and establishes and maintains participating provider files.
b. UMlQA - develops implements, and oversees policies and procedures
related to TriState's utilization management, case management, and disease
8 See Exhibit 4, TriState's Current Board of Directors.
') See Exhibit 5, TriState's Administrative Staff.
10 See Exhibit 6, TriState's Committee Charges.
II A Class I Director chairs the ClOe. Its members are the sub-committee chairs plus one Class II Director.
12 See Exhibit 7, TriState's Committee Membership.
()BER IKALERA P~llft!'S:l>lonal CotpOration
Mr. Donald S. Clark
July 9,2007
Page 6
management activities, including monitoring the metric and benchmark
achievement; and makes recommendations for group improvement.
c. Service Improvement ("SIC") - reviews, monitors, and makes
recommendations for improvement of clinical efficiency, utilizing available
technology; annually reviews TriState's clinical policies and procedures and
makes recommendations for changes; and develops new policies and
procedures.
d. Quality Improvement ("QIC") - develops and monitors clinical practice
guidelines, reviews and monitors the evidence-based medicine rules,
ensures use of and adherence to the guidelines by the physicians, and
ensures that processes are in place for migrating guidelines and rules to
TriState's membership.
e. Pharmacy Benefits Management ("PBM") - reviews the prescription drug
formulary, making recommendations for formulary changes and monitoring
drug utilization.
f. Care Coordination ("CCC") - performs concurrent review of care,
identifying issues for resolution through policy and/or procedure changes
and transmits such recommendations to the SIC for action.
c. Background
Although TriState started as a risk-sharing joint venture, it contracted on a
capitation basis only for a single year before ceasing to function as a financial risk-sharing
PHD. In 1998, TriState entered into an arrangement with InforMed, L.L.C.
("InforMed"),13 an Annapolis, Maryland health-care consulting and information
technology company that provides third party administrator ("TPA") services, medical
management, health information reporting, health information technology, and a regional
network of physicians, hospitals, and ancillary providers. TriState members who accepted
InforMed's rates and agreed to participate in the InforMed provider network, Community
Health Partners ("CHP"), signed new participation agreements with TriState. 14 In turn,
TriState signed a contract with InforMed for its providers to participate in the CHP
network; to provide some administrative services for InforMed, including credentialing,
network management, clinical oversight, and utilization review; and to obtain health
13 See http://www.infonned-lIc.com/(providing more infonnation on InforMed).
14 The TriState physicians deal directly with InforMed on any issues related to fees or payment of claims.
When fee schedule modifications are made, practitioners are free to accept, reject, or negotiate modifications
with InforMed directly. TriState is not involved in these discussions.
nSERIK/\LERA PrtlfesSlooal COf~QI'at«m
Mr. Donald S. Clark
July 9, 2007
Page 7
information technology ("HIT") services from InforMed. including management of
TriState's claims information database, design and support of an interactive website, and
Internet-based software for eligibility verification and medical referrals.
Through the years, InforMed has contracted with self-insured employers in
Washington County to provide TPA services, hospital and physician services through its
CHP network, and utilization and medical management to employers desiring these
services. Starting in 2004, TriState began working with InforMed on a plan for TriState to
assume more control, responsibility, and accountability over the medical management
functions. TriState has since hired a data analyst, a care coordination manager, and two
case managers, allowing it to subcontract with InforMed to provide all medical
management services for InforMed's Washington County clients.
InforMed currently has contracts with three Washington County employers for
which TriState provides medical management services and its providers, as part ofCHP,
render medical services. The largest employer is WCHSI, which contracts for its own
health plan, the Washington County Health System Health Benefits
"Plan"). Currently, the Plan covers 4,974 lives
The other two W~U.lll!;'VU
II. TriState's Market
A. Geography
TriState is based in Hagerstown, Maryland, the largest town in Washington
County, but its primary service area ("PSA") extends slightly beyond the county.
Washington County is located in a part of western Maryland that, at its narrowest point, is
only eight miles wide. In addition, Interstates 70 and 81 intersect in Hagerstown, making
interstate travel relatively easy. As such, TriState's secondary service area ("SSA")
includes parts of Pennsylvania and West Virginia, as well as Frederick County, Maryland.
To the east of Hagerstown, the next largest town is Frederick, approximately 25 miles
away. To the west, the next town is Hancock, again about 25 miles away. To the north,
about 15 miles away, is Waynesboro, Pennsylvania, and to the south, about 25 miles, is
Martinsburg, West Virginia.
B. Alternative Providers
The 2007 population forecast for TriState's PSA is approximately 145,000, and its
SSA is forecast to include more than 350,000 people. TriState's PSA accounts for 80.4%
ofWCH admissions, while 14.5% are from its SSA and 5.1% from other areas. Although
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it has not studied how far patients travel for its physicians' services, TriState believes that
the physicians' service area data would be similar to WCH's. There are no IPAs or PHOs
other than TriState operating within Washington County.
The closest competing health system in TriState's service area is Summit Health,
which includes Waynesboro Hospital, a 62-bed hospital, in Waynesboro, Pennsylvania
(about 20 minutes north of Hagerstown) and the 232-bed Chambersburg Hospital
(Chambersburg, Pennsylvania), located about 30 minutes from Hagerstown. Cumberland
Valley Health Network ("CVHN"). the PHO aligned with Summit Health, is a payer-
contracting organization.
Thirty minutes to the south, TriState's main competition comes from the providers
associated with City Hospital, a 144-bed hospital in Martinsburg, West Virginia. City
Hospital and many of its medical staff members contract with payers through Eastern
Panhandle Integrated Delivery System ('"EPIDS"). Based in Martinsburg, EPIDS is a
provider-sponsored, vertical arrangement of physicians and hospitals serving nine counties
in eastern West Virginia.
TriState's closest Maryland competitor is Frederick Memorial Hospital (Frederick,
Maryland), a 253-bed hospital located about 30 minutes east of Hagerstown. Frederick
County's only physician contracting organization ceased operations on December 31,
2006, and most of its former members now contract directly with payers.
C. The Payers
Approximately four percent of all patients in TriState's service area are self-pay
patients. Medicare, Medicaid, and TriCare-the government payer~over approximately
50 percent of patients, and workers compensation covers an additional two percent.
Private health insurance or self-insured employers using the services of health plans or
TPAs cover the remaining 44 percent of patients. The major commercial payers in
TriState's market include CareFirst BlueCross BlueShield ("CareFirst"), United Health
Care/MAMSI ("United"), Aetna, CIGNA, and InforMed. Together, CareFirst and United
cover almost 66 percent of the private insurance subscribers. The dominant form of payer
reimbursement for physician services in Washington County is discounted fee-for-service,
although United still reimburses PCPs on a capitation basis for its MDIPA and Optimum
Choice products.
III. TriState's Proposed Clinical Integration Strategy
TriState has three main objectives in developing and implementing its clinical
integration strategy. First, the components and processes of the program--exchange of
patient treatment information, clinical guideline development and adoption, performance
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monitoring and reporting, and collective work towards improved quality-will facilitate
and assure cooperative interaction and collaboration among TriState's member physicians.
This cooperation and collaboration should align the efforts of the physicians to improve
their patients' health and their delivery of services, resulting in the right care being
rendered in the right setting at the right time. Second, the clinical integration strategy will
engage every TriState stakeholder-physicians, case managers, administrators, payers, and
patients--in a cohesive and comprehensive program of care management. Through the
physicians' adherence to clinical practice guidelines, the physicians' and TriState's use of
HIT to identify high-risk and high-cost patients, the interactive patient support of
TriState's case managers and Medical Director, and involvement of payers in designing
care management initiatives, TriState will more aggressively manage its patients' care than
the stakeholders could achieve working independently. This aggressive care management
should result in identifiable quality improvements for patients and significant financial
benefits for payers. IS Third, the clinical integration strategy will allow TriState to offer
payers an integrated set of services-coordinated physician services focused on quality
improyement and medical management-not previously available in the market. This
integrated product will be desirable to self-insured employers looking to control the rising
cost of providing health care coverage to employees. It will also offer a competitive
advantage to health plans and other payers seeking to distinguish their products on the
basis of quality or quality-adjusted cost.
Although ultimate responsibility for the clinical integration strategy rests with
TriState's Board of Directors, TriState's members are, and will continue to be, actively and
collectively engaged in the strategy. The Clinical Integration Oversight Committee
("ClOG') will oversee development and implementation of the program through its sub-
committees-Credentialing, Utilization Management/Quality Assurance ("UMlQA"),
Service Improvement C'SIC"), Quality Improvement ("QIC"), Pharmacy Benefits
Management ("PBM") and Care Coordination ("CCC"). In addition to establishing the
strategic goals for each subcommittee, the CIOC provides a formal communication forum
for the subcommittee chairs, facilitating the exchange of information regarding the
activities of the subcommittees.
The clinical integration strategy will embrace the following key elements, all of
which will require the active and ongoing participation of TriState's member physicians:
1. TriState's program will be built around web-based HIT that will facilitate the
exchange of patients' treatment and medical management information, resulting
in coordinated care delivery, appropriate utilization of resources, controlled
costs. and improved quality and efficiency.
15 Data reflects that about five percent of beneficiaries in any health plan consume about 60 percent of claims
expense, while 40 percent of beneficiaries submit no claims in a given year. Thus, aggressive management
of the five percent can result in significant savings.
OBERIKALERA Pro1es~HDI".af Corp::lfat~ Mr. Donald S. Clark July 9,2007 Page 10 2. TriState's SIC will use InforMed's software to review episodes of care-all of the medical care and services a patient receives from the onset of an illness or disease through final treatment-encountered in their community and determine where performance improvement will have the greatest financial and quality impact. Using this information, the QIC and ad hoc committees of TriState member physicians will review the appropriateness of existing guidelines already incorporated in their HIT and develop additional, TriState- specific clinical guidelines, or Care Protocols. The CIOC and QIC will conduct periodic reviews of the clinical guidelines to ensure that the performance improvement sought has been met and, if not, to modify the protocols. 3. Through ad hoc peer education committees, the QIC will educate and train TriState's member physicians in the use and adoption of the Care Protocols. TriState will encourage use of HIT by the physicians to facilitate application of the Care Protocols to patient care and to create interdependence in their provision of medical care. 4. The CIOC and SIC will engage in ongoing monitoring to gauge the efficacy of the guidelines. Using HIT, the SIC will provide personalized feedback to TriState's members that compares each physician's actual performance against the performance goals for the TriState network. To assure progress in meeting its cost and quality efficiency goals, TriState has developed a performance improvement program, which includes peer education, behavior modification plans, and sanctions, if necessary. 5. TriState will involve its customers in the clinical integration program by sharing network performance reports, seeking customer input into modifications or additions to the quality improvement initiatives, and engaging the customers in the medical management program. 6. To complete its integrated product, TriState will integrate medical management with its physician services. The UMlQA will oversee the delivery of medical management services and the design of TriState's medical management program. The SIC will develop policies and programs to incorporate medical management into the physicians' practices. Using their HIT resources, TriState physicians and staff will identify patients who could benefit from disease and case management, and, with the support of the CCC, they will ensure that their patients receive cost-effective preventive care and avoid high-cost adverse incidents. Through the PBM, TriState physicians will work with local pharmacists to develop appropriate, cost-effective prescribing policies, medical necessity criteria for high-dollar drugs, recommended prescription drug
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fonnularies, and initiatives for educating TriState's physicians and patients
about generic drug alternatives. The PBM will also monitor patient medication
compliance and will work with physicians and patients to improve compliance.
TriState fully intends to implement the program outlined herein. The CIOC and its
subcommittees will closely monitor protocol compliance, benchmark achievement, patient
outcomes, utilization data, and claims costs. If TdState does not achieve the anticipated
quality and cost efficiencies within a reasonable time after implementation of the clinical
integration strategy, the CIOC and its subcommittees will closely re-examine the strategy,
detennine whether changes need to be made and, if so, where, and implement those
changes.
A. Integrative Health Information Technology
Internet-based HIT will serve as the foundation for TriState's clinical integration
strategy. InforMed, TriState's historic partner in serving Washington County's self-
insured employers, is tapping its extensive experience and expertise in HIT and supplying
the technology for TriState's strategy. To provide the optimal HIT tools, InforMed is
working with TriState's physicians on the UMlQA committee to redevelop its technology
products to meet the needs of this program and facilitate an infonnation exchange between
the physicians' offices, WCH, and anciUary providers in the community.
The main technology piece is InforMed's virtual electronic health record,
commonly referred to by TriState as the Clinical Claims Chart ("Chart"). Incorporated
into the chart are Ingenix's Symmetry family of products-Episode Treatment Groups
("ETGs"), Episode Risk Groups ("ERGs"), and Evidence Based Medicine Connect ("EBM
Connect,,).16 When delivered to the physician via the Internet, the Chart and its powerful
analytical tools should facilitate a high degree of cooperation, collaboration, and mutual
interdependence previously unattainable by these physicians working independently.
16 Exhibit 8 provides a detailed description of the Symmetry components of the Chart. For more information
on ETGs, see http://www.symmetry-health.com/ETGTut_Descl.htm.
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OBERIKALER A Pmf&$1Hlnal Corpora[J()n Mr. Donald S. Clark July 9, 2007 Page 17 B. Development, Approval, and Implementation of the Care Protocols 1. Developing and Approving Guidelines to Improve Quality EBM Connect's evidence-based guidelines for the treatment of 50 common, costly medical conditions and screening for eight preventive measures will serve as a starting point for TriState's guideline development efforts. Although panels of medical experts developed EBM Connect's guidelines, TriState's QIC is reviewing all of the EBM Connect guidelines for relevance to the population in the area served by TriState to ensure that the guidelines incorporate the best, most up-to-date practices. To ensure that the most qualified individuals review Symmetry's medical condition guidelines and preventive screenings, the QIC is convening multiple ad hoc committees of specialists in particular medical conditions (e.g., imaging, orthopedic and neurosurgical specialists to examine acute low back pain guidelines). The QIC is asking these ad hoc committees to carefully review each guideline and its care components to determine whether the guidelines follow current national standards and incoworate the best practices of TriState's members and, if not, what changes should be made? By subjecting these guidelines to exhaustive physician reviews, the QIC anticipates the TriState members will see that the guidelines are tested and ready for implementation in the community, thus increasing the members' comfort level. To truly affect all of its members' quality, TriState knows it will need guidelines in addition to those currently included in EBM Connect. The goal of the QIC is to have at least 80 percent of the medical conditions comprising at least 80 percent of the cost of care 20 Tn a cardiology review already begun, the physicians discovered that a particular EBM Connect guideline is no longer considered a recommended best practice. A diabetes committee determined that a pharmaceutical drug used to treat diabetes mellitus also is used to treat infertility. Patients being treated for infertility with this drug were flagged as patients with diabetes. Through InforMed, the Symmetry licensee, TriState communicated both of these findings back to Symmetry so the software could be modified accordingly.
()BERIKALER A Profe!SKlJl.ilI Caqroranoo Mr. Donald S. Clark July 9, 2007 Page 18 in the community, covered by at least one clinical guideline. The SIC, which will be monitoring the ETGs and the network medical costs, will determine where improvement in the treatment of specific ETGs encountered in the community would have the greatest impact on quality and cost. The SIC will then select specific diseases, diagnoses, and procedures from the identified ETGs and make recommendations to the QIC. Working from nationally available evidence-based guidelines, the QIC and its ad hoc committees will then develop TriState-specific clinical guidelines, or Care Protocols, covering those specific diseases, diagnoses, and procedures. The QIC and its ad hoc committees will also develop the quality improvement benchmarks against which the TriState physicians' performance will be monitored. When setting the benchmarks for the guidelines and protocols, the QIC will look at the TriState physicians' current baseline, captured from the InforMed claims data, and then set the benchmarks at a level above the baseline that will be challenging, yet not unobtainable. After an ad hoc committee reviews and, if necessary, revises a Care Protocol and its benchmarks, the QIC will review them and, if no additional modifications need to be made will present the guideline and benchmarks to the CIOC for its review and approval. The Board of Directors will conduct a final review and approve all Care Protocols and their benchmarks. After a Care Protocol receives final approval, the physicians to whom the guideline applies will be required to incorporate the Care Protocol into their practice and comply with the guideline when medically appropriate. 2. Implementing Quality Improvement Once the TriState physicians sign on to the clinical integration concept, they will need to be educated about the program, the guidelines, the protocols, and the Chart. 21 Just as the QIC will appoint specialty-specific ad hoc committees to review the guidelines and develop the Care Protocols, it will also appoint specialty-specific ad hoc committees to educate their peers and implement the guidelines and protocols. TriState believes strongly that the best way to change its members' practices will be through peer education and training. By teaching each other and collectively working to improve their quality scores, TriState's physicians will become more interdependent. TriState also believes that the Clinical Claims Chart will be instrumental in helping the physicians to adopt the guidelines and protocols into their clinical practices. By reviewing patients' records of treatment in the Chart, TriState physicians will be able to improve their compliance. Through peer teaching sessions, TriState physicians will work on peer engagement and improvement-first, by personal contact with colleagues when ~I TriState requires in its participation agreement that the physicians will comply with all quality improvement policies, which would include the EBM Connect guidelines and TriState'S Care Protocols. Exhibit 9 is a copy of TriState's provider participation agreement.
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they are out of compliance for particular patients, and second, by monitoring network
performance scores and encouraging each other to raise those scores.
c. Performance Monitoring and Feedback for Successful Improvement
To obtain the best result from its quality improvement and integration strategy,
TriState, through the CIOC and its subcommittees, will monitor guideline compliance,
benchmark achievement, hospital and emergency room admissions, service utilization, and
network costs. Because TriState is most interested in improving the performance of non-
compliant physicians ("moving the mean"), its focus will be on providing feedback to all
its members and using competitiveness and education to improve outliers. When
necessary, however, TriState will remove physicians from its network who refuse to
improve ("culling the outliers").
The SIC will be the main CIOC subcommittee responsible for reviewing and
monitoring practice efficiency, as well as moving the mean. Much of this will be done
utilizing the ETG tooL By risk-adjusting each patient's data to account for their illness
severity, the ETG report results are normalized, allowing direct comparisons across
patients with similar diseases and physicians who treat those conditions. Where the ETG
tool reveals TriState "best practices"-cost-effective methods of care with high quality
results-the SIC will formally, positively recognize the TriState members who met or set
the high standards. When the SIC identifies negative outliers or physicians who fail to
meet TriState's benchmarks, it will use the ETG tool to show the lower-performing
physicians their personal levels of utilization (both under and over) compared to the group,
as well as particularly high-cost care, or unnecessary care, provided to individual patients.
These physicians will be given an opportunity to discuss their quality and utilization data
with the TriState Medical Director and the SIC members so that they can agree what the
data indicates and discuss why, and how, practice modifications may need to be made.
TriState's goal for the SIC is to create opportunities for peer discussions of the individual
and network quality data, so that the physicians can exchange ideas about moving the
mean and support each other as they all work to improve. It is expected that the SIC
members will be aggressive instruments of change as they teach their peers about how to
use the ETG tool information and work with their peers to improve their quality and cost
performance.
When pay-for-performance ("P4P") incentives and peer education are insufficient
to change providers' practice patterns, TriState will take more aggressive steps, which may
include culling the outliers. Physicians who fail to improve after meeting with the SIC and
Medical Director will be given a choice of resigning from the panel or working further on
improvement. A physician who chooses to continue in the program will collaborate with
the Medical Director and one or more physicians from his or her medical specialty in
designing a behavior modification plan, which will set out improvement goals and a
OBERIKALER A Profewonal Corporation Mr. Donald S. Clark July 9, 2007 Page 20 timeline within which those goals will be met. The SIC will monitor the physician's progress in meeting the goals and will work with the physician, as necessary, to help him or her to achieve the goals. If, at the end of the period allotted in the behavior modification plan, the physician has not met the goals, the SIC will make a recommendation to the CIOC as to whether the physician should be given additional time or terminated from the panel. lithe SIC recommends termination, the physician will be given an opportunity for a hearing before the CIOC. The CIOC will then make a recommendation to the Board, which will have the final say in a physician's tennination from the TriState network. The UMlQA will also perform a monitoring function, but it will do so as the payers' intermediaries. Thus, when it reviews the quality metrics and achievement of benchmarks, it will be looking at how the network performed with respect to the patients of specific payers. The UMlQA will identify quality deficiencies, or treatment regimens in need of improvement, and will make recommendations to the CIOC, such as educational meetings, specialty-specific meetings, out-reach to specific physicians or practices, or integration of medical management components into the delivery of the physicians' services. Once the CIOC decides upon a course of action, the UMlQA will oversee the new program and assure follow-through for improvement. Once TriState begins incorporating P4P into its contracts, the UMlQA committee will work with payers to determine which benchmarks will be used for the P4P initiatives, and it will work with TriState's physicians to ensure that they make changes in their practices necessary to achieve theP4P goals and obtain performance bonuses. D. Incorporation of Medical Management for Higher Quality Care Medical management is the final component of TriState's integrated product. Unlike medical management programs run by payers or offered by independent companies, TriState's medical management services will be integrated with its physician services, such that one set of services cannot be separated from the other. To do this, TriState is tapping its membership and its CIOC subcommittees to develop its medical management program. All medical management services will be overseen by the UMlQA, which will ensure that TriState's physicians are integral members of each managed patient's medical management team. In addition to working with TriState's case managers on specific patient cases and following guidelines and protocols that fit into TriState's disease management programs, the TriState physicians will monitor patient cost and claims data in the Clinical Claims Chart and engage medical management resources-disease and case management programs, assistance of case managers, or support of the CCC-when necessary to ensure patients receive cost-effective care and avoid high-cost adverse incidents. Through the PBM, the TriState physicians will be engaged in pharmacy benefit design, as well as review and development of prescribing policies.
OBERIKALERA Profes!:IDMI CoJlK)rsfion Mr. Donald S. Clark July 9, 2007 Page 21 The UMlQA will provide oversight and monitoring for all of TriState's medical management programs and functions. The Medical Director and the Manager of Care Coordination will report to the UMlQA committee regarding all active programs. The UM/QA will also develop, implement, and oversee policies and procedures related to TriState's utilization, case and disease management activities. To do this, it will actively engage the TriState physicians in developing the programs and policies, seeking feedback as the programs are implemented to ensure the physicians find value in participating in medical management efforts and make use of the available resources for their patients. The UMlQA will also utilize ad hoc physician committees to provide training to the TriState membership on medical management programs as they are rolled out, further reinforcing the concept of medical management integrated with physician services. Based on recommendations from the TriState physicians and administrators, the UMlQA will make policy and program change recommendations, as necessary, to improve quality and reduce costs for the patients and payers. On the recommendations of the UMlQA committee, the CIOC will draft TriState's quality improvement policies and procedures relating to medical management. These policies and written procedures will be a means of memorializing the "lessons learned," as TriState's physicians become more involved in the medical management process, and should also facilitate quality improvement over time. The croc will annually review all medical management policies and procedures and recommend changes when necessary. 1. Disease Management/Case Management One of the main roles of the UMlQA will be to recommend, based on data from the ETG and ERG tools, the development of disease management programs that will integrate case management services with the delivery of primary and specialty care physician services. In addition to working with TriState physicians and administrative staff to create these programs, the UMlQA committee will oversee and monitor the disease management programs, recommending changes to improve coordination and collaboration in the delivery of disease management services. Unlike many commercially-available or payer- run disease management programs, TriState's disease management programs will be developed and overseen by the physicians, who will be actively involved in working with their patients, their patients' other health care providers, and the TriState case managers in managing and improving their patients' health, as well as engaging patients to manage their own health. TriState believes its members, patients, and client-payers will see significant benefits from these disease management initiatives because of the success it has already had with the more limited diabetes management program that it currently operates. 22 22 Two years ago, TriState launched a diabetes management program for WCHSI Plan members that involved aggressive case management work with diabetic patients and their PCPs. TriState identified participants by their ERG risk score, enrolling the highest risk patients first. Although costs for these patients went up in the
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Supporting the medical management from the administrative side is TriState's
Care Coordination Committee ("CeC"), which meets on aweekly basis to perfonn
concurrent review of physician and hospital services. Although it perfonns a utilization
review function, the purpose of the eec is to identify operational and medical
management issues in the delivery of physician and hospital services, reduce the expenses
for high-cost patients, and ensure that patients receive the appropriate amount of service
from TriState member physicians and care managers. The ecc involves the patients'
PCPs in making decisions about care and, when necessary, also sees that patients are
referred to SCPs who can recommend additional means of improving the patients' health.23
TriState believes that its new approach to medical management will destroy the negative
view of medical management as interfering and disruptive that many physicians have and
already has seen that its members see the wisdom of working more closely with TriState's
case managers to improve the health of their patients.
2. Pharmacy Management
Pharmaceuticals are among the largest contributors to payers' health care costs.
Although payers often provide fmancial incentives to patients to use generics and less-
costly alternatives, the payers' costs will not significantly change unless the physicians'
prescribing patterns change. Payers attempt to do this through the creation of prescription
drug fonnularies, which list the drugs the payers are willing to cover and the amount or
portion of the drugs' cost the payers will cover. The problem with fonnularies is that they
are often put together without physician input and differentiate coverage solely on the basis
of cost for the individual medications. Thus, many physicians chafe at the restrictions of
the fonnularies.
TriState believes that only through the collaborative efforts of physicians can
pharmaceutical costs be reduced. To spearhead its pharmaceutical strategy, TriState
established the PBM, which includes both local pharmacists and TriState physicians. One
of the main functions of the PBM will be to monitor drug utilization, which will help
TriState and its contracted payers to identify high-cost prescribing practices and low-cost
alternatives. Through this committee, TriState's members will be able to debate the value
first year due to the provision of preventive physician services and increase in case management, costs for the
second year have decreased almost to the base year level. Given the progressive nature of the disease, it is
not expected that costs will decrease over time below that of the base year. However, it is expected that the
program will slow the rate of increase.
23
o B E R I!5,;~~~(~~.t~~ Mr. Donald S. Clark July 9,2007 Page 23 of certain therapies, as compared to their costs and risks, and identify "best prescribing practices." The physicians and pharmacists of the PBM will develop medical necessity criteria for high-dollar drugs and create generic drug initiatives to educate physicians and their patients about low-cost alternatives. The PBM will also make recommendations to the QIC regarding best prescribing practices that it believes should be translated into Care Protocols for TriState physicians. For self-insured employers and other payers seeking to get a better handle on theirpharmaceutical costs, the PBM will review the payers' formularies and drug tiers2 and, through the CIOC, recommend changes that will be both beneficial to the patients and approved by the physicians. Although payers will have the right to reject proposed formulary and tier changes, ideally TriState will have a single formulary with which its physicians comply, thus simplifying and standardizing the prescribing process. For self-insured employers, thePBM will also review and decide appeals for coverage of non-formulary drugs. TriState anticipates its physicians will be more responsive to determinations by this committee because they will know their peers reviewed their patients' appeals. Because pharmaceutical costs consume a large portion of health care dollars, the PBM and UMlQA will work together in determining how to incorporate pharmaceutical management more intensely into TriState's medical management program. The physicians will benefit from pharmacists' expertise when trying to determine the best, most cost- effective course of treatment for their high-risk patients, and the patients will benefit from pharmacists reviewing their medications. IV. TriState's Contracting with Payers Payers who choose to purchase the integrated product will receive TriState's complete network of physicians, collaborative quality and cost improvement initiatives, and all of the medical management services integrated with the physicians' services. The TriState physicians will not be allowed to "opt out" of TriState's payer contracts; they will be contractually required to participate in any contracts TriState enters. When payers enter contracts with TriState, they will have the option of terminating any pre-existing direct contracts with TriState physicians or allowing the TriState contract to supercede the physician contracts. TriState will, however, be non-exclusive. If a payer doesn't want the complete physician network, or doesn't want to contract with TriState, then it will have the option of contracting directly with the physicians, and TriState's physician members will be free to do so. If a payer wants an employee wellness program-to address lifestyle changes necessary to prevent chronic disease--or medical management--<:ase, disease, and/or pharmacy-services, TriState's administrative staff (rather than its physicians) will oversee and provide those services. But, the core parts of its product-protocol 24 Many payers influence their members' choice of drugs by having tiered co-pays. Generally, generics have the lowest co-pay and lifestyle drugs, such as Viagra, have the highest co-pay.
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development and implementation, quality monitoring, and cooperative management of
patients' medical needs--<:annot be sold separately because they will be integrated into,
and inseparable from, the physicians' services. TriState believes that to fully achieve the
anticipated cost and quality efficiencies of its clinical integration strategy, it must price and
sell the full set of services as a single product. When selling its integrated product to
payers, TriState will offer payers two different payment systems, P4P and fee-for-service.
A. Paying for Superior Outcomes and Quality Processes
While P4P is a relatively new payment methodology, the concept is rapidly gaining
traction and many of the major payers-including Medicare and the managed Medicaid
plans-are developing their own particular strategies for paying for documented quality.25
While recognizing and paying for quality is generally a laudable goal, the issue at the
individual physician level is that each payer's P4P strategy will be different and each will
have attendant incremental costs for compliance. 26 In many cases, the costs to an
individual physician to comply with a payer's program is greater than the available
perfonnance payment or recognition for the physician, making it unlikely many solo- or
small-practice physicians will participate.
To bring about change through P4P. TriState plans to develop a single P4P
program in which all commercial payers in the community will participate. TriState's
model for its P4P pror,am is the California P4P run by the Integrated Healthcare
Association ("IHA"). 7 The IHA's P4P program measures the perfonnance of physician
groups in treating their HMO patients on a common set of measures used statewide by
seven participating payers who make incentive payments to the physician groups based on
their perfonnance on the standardized measures. Like the IHA collaborators, TriState
2S See, e.g., http://www.cms.hhs.gov/PhysicianFocusedQuallnits/ (providing information on Medicare's P4P
initiative); http://www.bridgestoexcellence.orgimarketsistatesimaryland.mspx (describing programs operated
by CareFirst and Aetna in Maryland); http://www.uhc.com!healthcaretrendslhealthcarequality.htrn
(introducing United's concept of "premium" physicians who meet certain quality requirements).
26 For example, one payer's P4P initiative may pay physicians higher if they receive "recognition status"
through one of National Committee for Quality Assurance's ("NCQA") prograrns-diabetes, heart/stroke,
back pain, and physician practice technology. To achieve the status and qualifY for the payments, a
physician must pay an application fee and incur a "data mining" cost for reviewing his or her medical records
to determine compliance with the NCQA standard. A second payer's P4P program, though, may be based
entirely on compliance with a set of guidelines that deal with performance of cancer screening tests. The
physician then incurs incremental costs for complying with this requirement.
27 See www.iha.org for details on the program. The IHA's program is a collaborative effort of payers,
physician organizations, hospitals, phannaceutical representatives, technology professionals, consumers and
academic representatives. lHA's P4P program facilitates the financial reward of physicians, through their
integrative groups, for improved performance in clinical care, HIT adoption, and patient satisfaction by
providing a clear set ofperfonnance expectations.
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Page 25
physicians will work with the other stakeholders in the community-patient
representatives, self-insured employers, and commercial payers-to develop a consensus-
based P4P model that includes guidelines (Care Protocols), performance measures, and
outcomes-based metrics. By having a program with unifonn requirements and
benchmarks, the TriState physicians will be able to focus all of their efforts and resources
on working cooperatively to achieve quality improvements that will benefit all of the
collaborating parties in the Washington County P4P. Unlike the IHA's program, TriState
does not intend for its P4P to provide merely a bonus payment to its participating
providers. Rather, TriState envisions a payment methodology under which all payments to
its providers will take into account the quality of services its members provide.
TriState understands that its program must be sufficiently compelling to incentivize
commercial payers like CareFirst and United to step outside of their own model and agree
to work with a physician group that is focused on superior outcomes, achieving superior
costs, and is data-driven. As a result, TriState believes that it will need to collect a year or
more of performance data from its physicians, showing the success of its clinical
integration strategy for self-insured employers and smaller payers. Thus, it will need to
contract on a fee-for-service basis for some period before it is able to implement its P4P
program.
B. Fee-for-Service Contracting
As part of its clinical integration strategy, TriState plans to negotiate both price and
non-price terms with payers for the sale of its integrated package of services. TriState
anticipates that its fee proposals will be based on a percentage of the Medicare Resource
Based Relative Value Scale, which will cover its members' integrated physician services
and the other components of the integrated product.
To develop competitive fee proposals, TriState's PHO External Relations
Representative will survey the practices to detennine what the physicians' price
expectations may be and then will aggregate the data into a fee proposal. Only TriState's
non-physician administrative staff will see the practice surveys, and, once the aggregation
is complete, the survey responses will be destroyed.
Although TriState will show payers this aggregated fee proposal, it anticipates that
some payers will make other proposals or counter proposals. TriState's Finance-
Contracting-Administration committee ("FCA") will be responsible for reviewing the
payers' offers and advising TriState's administrative staff. TriState's Board of Directors
will review contract approval recommendations from the FCA. TriState's antitrust
attorney will counsel the members of the FCA and Board of Directors regarding the need
to keep all competitive terms confidential and not to allow negotiations of the joint venture
OBER/KALERA PrClfEJs:uonal f.GrporatKln
Mr. Donald S. Clark
July 9, 2007
Page 26
product to influence the tenns and conditions upon which the physicians will agree to
contract individually.
C. TriState's Need to Contract on its Members' Collective Behalf
TriState will negotiate the price and other tenus for the sale of its integrated
product. Although TriState acknowledges that contracting on its members' behalf will
eliminate competition among its physicians as to the integrated product and, therefore,
constitute "inherently suspect" conduct under Polygram. TriState's integration will
generate significant cost and ?uality efficiencies, and its joint contracting is ancillary to
achieving those efficiencies. 2
Under the Polygram framework, TriState's joint negotiations are not summarily
condemned if TriState can explain why the joint contracting is either not expected to have
an adverse effect on competition, or is likely to provide benefits to consumers. 29 TriState
must proffer justifications that are both cognizable-i.e., they explain how the collective
negotiation enables TriState and its physicians to "improve product quality, service, or
innovation"-and plausible--:-i.e., there is a "specific link" or "logical nexus" between the
joint contracting and the articulated pro-competitive effects.)O Specifically, TriState needs
to show that its program "involves potentially efficiency-enhancing integration" among its
members and that the collective negotiation is "reasonably necessary-i.e., 'ancillary'-to
the achievement of the proposed program's integrative efficiencies.") 1 If, as TriState
purports, its joint contracting is ancillary, the rule of reason applies to its joint negotiations,
28 See Polygram Holding, Inc., No. 9298, slip op. at 29-35 (FTC luI. 21, 2003), reprinted in 5 Trade Reg.
Rep. (CCH) 1 15,453, aff d 416 F.3d 29 (D.C. Cir. 2005) ("Polygram"). The Commission has detennined
that physiCian collective negotiation through a provider-controlled contracting organization is "inherently
suspect under Polygram. N. Tex. Specialty Physicians, No. 9312, slip op. at 26 (ITC Nov. 29,2005),
reprinted in 2005-2 Trade Cas. (CCH) 1 75,032, appeal argued, No. 06-60023 (5 th Cir. Mar. 5,2007)
("NTSP").
29 At this point in the analysis, TriState "need only articulate a legitimate justification, and is not obliged to
prove the competitive benetits." NTSP at ]2.
30 As the Commission explained in NTSP, the "concept of ancillary restraints, which allows an agreement
that would otherwise be viewed as a naked restraint of trade to be evaluated in light of the procompetitive
effects of an efficiency-enhancing integration of economic activity to which it is reasonably related, is
subsumed in the Commission's Polygram analysis." Id. at 13 n. 20.
31 Letter from David R. Pender, Acting Assistant Director, Bureau of Competition, to Clifton E. Johnson,
Esq., Hall, Render, Killian, Heath & Lyman (March 28, 2006), available at
http://www.ftc.gov/osl2006/03/SuburbanHealthOrganizationStaffAdvisoryOpinion03282006.pdf ("SHO").
See also, NTSP at 33 (" ... if an JPA can establish that its joint negotiation of price is reasonably related to an
efficiency-enhancing integration of the participants' economic activity and is reasonably related to achieve
the procompetitive benefits of that integration, the price-related activities may be lawful.").
UBERIKALERA p(Qre'5:nonat Corporatioo Mr. Donald S. Clark July 9, 2007 Page 27 and the primary question becomes whether, through TriState, its physicians would be able to exercise market power. 1. Efficiency-enhandng Integration TriState's integration strategy should create a degree of interdependence and facilitate collaboration among its members in their provision of care to their patients in ways that should generate significant cost and quality efficiencies. As explained above, TriState members are working together to develop and implement "an active and ongoing program to evaluate and modify practice patterns by the network's physician participants."n The QIC is reviewing EBM COIlllect guidelines and developing Care Protocols, which the TriState physicians will incorporate into their practices. The physicians, individually and through TriState's committees, will track their quality and cost performance using the Clinical Claims Chart. The SIC will evaluate the physicians' progress, work to improve individual's and the network's quality, and recommend, if necessary, expUlsion of persistently underachieving members. To further control costs and assure quality of care, the UMlQA committee will "establishD mechanisms to monitor and control utilization of health care services" and develop policies and programs to integrate medical management services into the physicians' practices. 33 Thus, the quality of services the TriState physicians provide should improve, and health-care services and resources will be delivered and utilized more efficiently. Patients should also benefit from the time saved by the TriState physicians' use of the Clinical Claims Chart and electronic exchange of referral information. The program's success wiH require a portion of the members' capital contributions to finance the infrastructure and HIT. The program's success will also require the physician participants to invest significant amounts oftime and effort serving on TriState's formal and ad hoc committees, implementing guidelines and protocols in their practices, integrating medical management into their practices, collaborating in the care of their patients, and working together to achieve their quality and cost benchmarks. 2. An Ancillary Agreement TriState's contracting on behalf of its physician members will substantially enhance the success of its integrated product. TriState's contracting will be "part of a larger endeavor whose success they promote.,,34 The following interrelated reasons provide "logical nexus[es]" between TriState's joint contracting and its achievement of 32 Statements, Statement 8.B.l. 33 Id. 34 Polk Bros .. Inc. v. Forest City Enter .. (nc., 776 F.2d 185, 189 (7111 eir. 1985).
OBERIKALEK A Professional CorPJl'auon Mr. Donald S. Clark July 9, 2007 Page 28 cost and quality efficiencies. 35 For TriState to integrate its members' services with the quality improvement measures and medical management, it is important for all TriState physicians to participate, and be included, in the contracted network. Unless it sells its members' services as part of a single package, TriState cannot discern how it will be able to ensure that all of its physicians are included in each contracted payer's network. In this respect, the collective contracting "serves to make the main transaction [the integration of medical services] more effective in accomplishing its purpose" of improving the quality of medical care and reducing health care costS. 36 The success of TriState's program depends significantly on its physicians participating in all its contracts. The only way to ensure that all TriState physicians participate in all TriState payer contracts is for TriState to negotiate payer contracts for its complete network and prohibit its members from "opting out" of its contracts. No other contracting methodology will ensure full participation. First, having the same network for all integrated product contracts is important to integrating the quality improvement initiatives and medical management services into the physicians' practices. Maximizing the physicians' collective participation in payer contracts for the integrated product will, by extension, maximize the number of patients in each physician's practice covered by the integrated product. Each integrated-product patient is an opportunity for the physicians to collaboratively treat a patient, integrate guidelines and protocols into their practices, use the Clinical Claims Chart, and incorporate medical management into their practices. The more the TriState physicians engage in integrative activities, the more interdependent they become, increasing the likelihood they will achieve the anticipated cost and quality efficiencies. Second, and related to the first, by having a single integrated network provide services under its integrated product contracts, TriState will be able to reinforce its in- network referral policy, ensuring that patients stay within the TriState network to the greatest extent possible. In-network referrals are important to TriState's integration strategy because each time a TriState patient goes out of network, TriState loses an opportunity to gather infonnation for the Clinical Claims Chart, to ensure physicians have an accurate record of care, to improve the health of that patient, and to control the costs of the patient's care. If TriState's network changed from contract to contract, it would be difficult to ensure that referrals stay within the appropriate network because the TriState providers could not be certain that all TriState providers were part of a payer's network. Having a single, integrated network for every payer with which TriState contracts ensures that the TriState physicians will be able to keep referrals in the network for all services TriState physicians provide. In addition, TriState intends to seek contractual reinforcement 35 NTSP at 29. 36 Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 792 F.2d 210,224 (D.C. Cir. 1986).
OBERIKALERA""'''',,,,,,,,., Corpora_ Mr. Donald S. Clark July 9, 2007 Page 29 from payers of its in-network referral policy. TriState's current self-insured-employer contracts through InforMed provide coverage through a tiered network-TriState is the first tier, contracted out-of-county and tertiary-care providers are the second tier, and a national rental PPO network is the third tier. Patients have a financial incentive, through lower co-payments and coinsurance, to stay within the TriState network, the first tier. InforMed data suggests that this tiered system has successfully limited out-of-TriState referrals, and TriState intends to negotiate for the inclusion of a similar tiered system in its payer contracts for its clinical integration product. Third, joint contracting provides an important incentive for the TriState physicians to develop and implement the clinical integration program. "A restraint is ancillary when it may contribute to the success of a cooperative venture that promises greater productivity and outpUt.,,31 Absent assurance of participation in TriState's contracts, and thus a share of the revenue generated by those contracts, the physicians would have less incentive to devote substantial time to reviewing guidelines, developing protocols, teaching their peers about the guidelines and protocols, monitoring their peers' quality, developing medical management policies, reviewing prescription drug literature, or developing and maintaining a drug formulary. Without the physicians' investment of time in developing and implementing the clinical integration strategy, there will be no integrated product for TriState to sell. Thus, collective negotiations are integral to the clinical-integration strategy's success. Fourth, TriState's offering a single network for its integrated product, and requiring all members to participate in all network contracts, ensures that its network is readily identifiable by payers and their subscribers. When payers contract with a physician organization, it is often important to them that the organization provides an accurate list of its providers and guarantees those providers' participation. Only by contracting on behalf of all members, and requiring its members' participation in those contracts, can TriState ensure that payers will get the full network and thus that they need not negotiate contracts with numerous individual physicians as wel1. 38 Likewise, when patients sign up for benefits, they want to be able to quickly determine whether their physicians are in the payer's network. If it's clear that all TriState physicians must participate in a payer's TriState network, patients will not need to rely on the accuracy of provider directories. J7 Polk Bros., 776 F.2d at 189. 38 Payers will also get the benefit of the transaction cost efficiencies from single-signature contracting. Although these efficiencies may be insufficient by themselves to justify TriState's collective contracting, their value to payers should be considered in light of the other proffered justifications. See generally. Broadcast Music, tne. v. Columbia Broad. Sys., 441 U.s. 1 (1979).
USERIKALERA Prntru;s~l1al COrpofatton Mr. Donald S. Clark July 9, 2007 Page 30 Finally, having a single network will reduce TriState's administrative burdens and increase operational efficiencies. TriState won't have to deal with problems of monitoring and enforcing guidelines and protocols for different physicians for different contracts. It also will not need to create different lists of physicians for its online referral system. D. No Adverse Effects on Competition TriState's contracting on the collective behalf of its physicians is unlikely to have adverse consequences on competition in the markets for physician services. 39 First, TriState will take steps to prevent any anti competitive spillover. Second, TriState will not have market power. 1. No anticompetitive Spillover In the context of provider-controlled contracting networks, anticompetitive spillover effects can occur when pricing infonnation, legitimately obtained and used by the network, is disseminated to, or otherwise obtained by, network physicians. The concern is that the physicians may use that infonnation in establishing the prices for their services sold outside the network. To prevent this, TriState will take preventive steps. First, TriState will limit its members' access to competitively sensitive infonnation. Second, it will provide antitrust counseling to members of the committees responsible for dealing with competitively sensitive infonnation and antitrust guidelines to its members. Finally, it will require all board and committee members to sign confidentiality agreements and will use those agreements to enforce its confidentiality policy, which prohibits the disclosure of competitively sensitive infonnation. When TriState is developing its fee proposals, TriState's PHO External Relations Representative-a non-physician staff person-will conduct the surveys of member practices. Only non-physician staff, who will aggregate the information and destroy records from individual practices, will view physicians' prices. Once a contract is in place and the physicians begin rendering services, the members of the UMlQA and SIC will have access only to cost, not pricing, infonnation as they perform utilization, quality, and cost-effectiveness reviews. TriState will make every effort to limit the competitively sensitive information reviewed by its committees. In addition, TriState's committee and board members will receive antitrust counseling to keep competitively sensitive infonnation confidential, not to use TriState's 39 The Commission stated in NTSP. "A defendant can avoid summary condemnation, however, if it can advance a legitimate justification ... •[s Juch justifications may consist of plausible reasons why practices that are competitively suspect as a general matter may not be expected to have adverse consequences in the context of the particular market in question'." NTSP at 12 (emphasis added) (citation omitted).
(,JBERIKALER A Profe~K!flat CotporatlOn Mr. Donald S. Clark July 9, 2007 Page 31 information for any business they conduct outside TriState, and not to discuss or exchange their own prices or competitive terms. All committee and board members will be required to sign confidentiality agreements, prohibiting them from disclosing competitively sensitive information to anyone outside their committee or board, If TriState learns of any such disclosure, it will enforce the confidentiality agreement and remove the individua1(s) from the committee or board. 2. No Market Power If TriState does not have "sufficient market power to restrain competition substantially ... the inquiry is at an end; the practice is lawful.,,4o TriState's participation percentage of physicians in Washington County will be high in some specialties, but TriState will be truly non-exclusive. Accordingly, TriState will not have market power. a. Participating Physicians41 Short of litigation, defining the market and calculating market shares would be impossible. Although most of TriState's member physicians have offices in Hagerstown, the center of TriState's primary service area, they draw patients from a broad geographic area. TriState's secondary service area includes parts of Frederick County, Maryland, southern portions of Franklin and Fulton Counties in Pennsylvania, and Morgan, Berkeley and Jefferson Counties in West Virginia. Within the secondary service area, there are roughly 1,200 physicians, of which 16 percent are TriState's members. 42 The vast majority of TriState members have admitting privileges at WCH.43 As a group, TriState members comprise 64 percent ofWCH's medical staff. In most specialties, they constitute half or more ofthe physicians with admitting privileges (anesthesiology, cardiology, family medicine, internal medicine, nuclear medicine, obstetrics/gynecology, oral & maxillofacial surgery, orthopedics, pediatrics, physical medicine, plastic surgery, podiatry, radiation oncology, and radiology). TriState's 40 General Leaseways, Inc. v. Nat') Truck Leasing Ass'n, 744 F.2d 588, 596 (7'" Cir. 1984). 41 Because TriState does not know which, if any, of its contracted providers will participate in the clinical integration strategy, the TriState contracted providers are not included in Ihe participation percentages. TriState does not believe this omission will greatly distort the numbers, as it is likely that a portion of its Class I Members will decide not to participate, as well. 42 See Exhibit )0 (listing the providers by specialty). The source for the infonnation was the American Medical Association broker listing. 43 See Exhibit 2 (listing all TriState members, contracted providers and all physicians with admitting privileges at WCHA). Some TriState members do not have admitting privileges at WCH; they rely upon hospitalists to admit and care for patients who need inpatient care at WeH.
OBERIKALERA f'rQ'fessionat CorptH<UlOO Mr. Donald S. Clark July 9, 2007 Page 32 members comprise 100 percent of the physicians with privileges in 10 specialties (allergy, endocrinology, gastroenterology, infectious disease, neurosurgery, hematology/oncology, otolaryngology, pain management, and pathology). These percentages are somewhat deceptive, though, as there are small total numbers of physicians in many of these specialties. Although TriState does not expect all of its members to participate in the clinical integration strategy, it hopes that most will so that it can maintain adequate geographic and specialty coverage. TriState's clinical integration strategy will be most effective when it is able to provide all medical care with in-network providers. Market shares, or participation percentages as proxies, are only one factor bearing on market power, as the Competitor Collaboration Guidelines recognize. 44 Even more important is ''the extent to which the relevant agreement is non-exclusive in that participants are likely to continue to compete independently outside the collaboration in the market in which the collaboration operates. ,,4S If a network is truly non-exclusive, the physicians cannot obtain, or exercise, market power by contracting jointly through the network because all the alternatives that were available to Fayers remain available. All the network does is provide an additional competitive option. 4 b. Non-exclusivity TriState will be both de jure and de facto non-exclusive. If a payer does not want to contract with TriState, or cannot reach an agreement regarding contract terms, it will be free to contract directly with TriState's physicians. Because it is currently non-exclusive and its members contract directly with most payers, TriState has little concern ahout continuing to operate on a non-exclusive basis. It will, however, emphasize to its members that they may contract directly with any payer with which TriState does not have a contract. In addition, when payers notify TriState that they would prefer to contract with the physicians directly, TriState will send out notices to its providers to ensure they are aware of contracting opportunities and know that they are free to enter contracts with those payers. Thus, TriState's physicians will be available to, and in fact will, provide services to payers outside of TriState's programs. TriState's administrative staff, who will be responsible for dealing with payer representatives, will receive antitrust counseling to ensure that they understand non- exclusivity, including the fact that payers must be free to decide whether to contract with 44 ABA Section of Antitrust Law, Joint Ventures: Antitrust Analysis of Collaborations Among Competitors § 3.34 (2006). 46 Cf. Wis. Music Network v. Muzak Ltd. PartnershiI!, 5 F.3d 218,222 (the "program enhances competition by increasing the available choices for ... customers").
OBER/KALERA ProfessIOnal CorporcllHJn Mr. Donald S. Clark July 9, 2007 Page 33 TriState. Although TriState will make every effort to market its integrated product on its merits, payers wishing to contract with TriState's physicians outside of the TriState's program will be able to do so. TriState will take no action to prevent the payer from contracting with its members directly. v. Conclusion TriState's goal, in implementing its clinical integration strategy, is to help provide a solution to the rising cost of health care for Washington County employers. Through the cooperation and collaboration of its physicians, TriState'S integrated product should improve the quality and cost-effectiveness of the health care services its physicians deliver and should, therefore, provide important benefits to patients, employers, and payers. A secondary goal of the clinical integration strategy is to support the independently practicing physicians by giving them the tools to provide better care to their patients and helping them to produce a premium product for which purchasers are willing to pay a higher price. The program should benefit all three stakeholders-patients, payers, and physicians. Pursuant to Federal Trade Commission Procedure Rule lA, 16 C.F.R. § 1.4 (2006), GRIP A requests that portions of this letter, as well as certain documents attached as exhibits hereto, be treated as confidential under Federal Trade Commission Procedure Rule 4.10, 16 C.F.R. § 4.1O(a)(2) (2006), and § 6(t) of the Federal Trade Commission Act, 15 U.S.C. § 46(t) (2006). All information to be withheld is competitively sensitive infonnation, including pricing, costs and information subject to confidentiality agreements, patents, or copyright protection. Sincerely yours, Ct~ Vg~",-"" Christi 1. Braun 144311vS
Exhibit 1
BYLAWS OF TRI-STATE HEALTH PARTNERS, INC. Page 1 of 20 Pages
Exhibit 2
Exhibit 2
TriState Physicians and Physicians with WCHA Privileges
~s~.. \:: ~i5:r~ FI~t ":' ~i~d!.!l·rt:\, •.. T~e:... . ': (J~~ysICla!ls'~fCl~~t:e Group:" s.peclalty~t:lipuoJ)
~i~c;;: WCHA WCHSJ. TriState.: ~r .•
. < '.' .::' ;.• ;.>:.:... \ ........ " \,:." H9SP£; .employ~ TriState Contr"~ H9Sp•. Priv•
,'.,
" ,.':' q..('. i.' ,:.., ' ...... : Prlv' >" >: ~ Member . "'.'~' :
Mauriello Paul MD Mauriello & Orfan PA Allergy/Immunology Haoerstown x x ,
Orfan Nicholas MD Mauriello & Ortan. PA Allergyllmmunology Haaerstown x x
Ajrawat Satinder Mo Blue Ridge Anesthesia Associates. Anesthesiology Hagerstown x x
LLC
Bradford Norman F, Mo Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x x
LLC
Carpentieri Richard F. MD Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x x
LLC
Cifor Sandra DO Blue Ridge Anesthesia Associates, AnestheSiology Hagerstown x x
LLC
Cios Jerzy H. MD Blue Ridge Anesthesia Associates, AnestheSiology Hagerstown x x
LLC
Cutler Carlo DO Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x
LLC
D'Alauro Frederic S, Mo Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x x
LLC
Horn Michael MD Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x x
LLC
Kataria Bideshwar MD Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x
LLC
Magnus Adam C MD Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x
LLC
Monteblanco Sofia DO Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x
LLC
Shank Luigina MD Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x x
LLC
Trevan Lisa C. MD Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x
I'Bachenheimer) LLC
Wertheimer Barry MD Blue Ridge Anesthesia Associates, Anesthesiology Hagerstown x x
LLC
Soodan Ajay MD Baltimore Heart Associates, PA Cardiac Randallstown x
Electrophysiology
Hornbaker John H, MD Cardiac DiagnostiC Center CardiolofrL Hagerstown x x
Amegashie Ernest Kojo Mo Cardio-Vascular Center of Cardiology Hagerstown x x
Hagerstown
Faridi Zubair H MD Hagerstown Heart Cardiology Haqerstown x x
Exhibit 2 2 TriState Physicians and Physicians with WCHA Privileges Last} ') First Mld~le'5, ' Tltl~;:< ';: <: Pl:lYsIc1a'lIt,Practlce Group' " S~clalty Description " i~t!¥;i;,."t~':~i:';r;,~!;;~<' .. , WCHA WPHSI,,' !Trl~t~ 'TriState ,Other " , , h;," ' " '. ,,:' "":" ','", ,," ~ " ,HoSp> (:e~~~~~~; ~;Meinbel" cOlltracted ~osp.prlv, ,::' .:: : ,,;~ ,,' " ~ \ Prlv. " I' . Hamilton Scott Martin MD Ha!lerstown Heart Cardiolo!lY Ha!lerstown x x Hood W. Stephen MD Hagerstown Heart CardiolollY H<m..erstown x x Jones Jeffrey D MD Hagerstown Heart Cardiology Hagerstown x x Notabartolo Dean MD Ha!lerstown Heart Cardiology Hagerstown x x Papuchis Gary C. MD Hagerstown Heart Cardiology Hagerstown x x Reilly Joseph M. MD Hagerstown Heart Cardiology Hagerstown x x Carlos Michael E MD Robinwood Heart Center Cardiology Hagerstown x Haque Reyaz UI MD Robinwood Heart Center Cardiology. Hagerstown x Padder Feroz Ahmad MD Robinwood Heart Center Cardiology Hagerstown x x : ZiNi Khalid Mahmood MD Robinwood Heart Center Cardiology Hagerstown x x DonofriO Mary Teresa MD Children's National Medical Center Cardiolo!lv, PediatriC Washington DC x Doroshow Robin Winkler MD Children's National Medical Center Cardiology, Pediatric Washington, DC x Nahar Jai K MD Children's National Medical Center Cardiology, Pediatric Washington DC x Spurney Christopher Fore MD Children's National Medical Center Cardiologv, Pediatric Washington DC x Rumbarger Tara A MD Drs. Rumbarger & Schiro, PA Dermatol<lQt Hagerstown x x Schiro James MD Drs. Rumbarger & Schiro, PA Dermatology H~erstown x x Waldman Paul MD Drs. Waldman & Money, PA Dermatology Hagerstown x x Barrueto Fermin MD Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Bernius Morgen Jolielte MD Washington County Emergency Emergency Medicine Hagerstown x PhYSicians, LLC Corwell Brian Aiall MD Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Darling Robert G. MD Washington County Emergency Emergency Medicine Hagerstown x x PhysiCians, LLC Gaibi Tanveer MD Washington County Emergency Emergency Medicine Hagerstown x Phy_sicians, LLC Gilbert Thomas J. DO Washington County Emergency Emergency Medicine Hagerstown x x Physicians, LLC Helinski Christine LaRue M.D. Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Kadiwar Jayantilal MD Washington County Emergency Emergency Medicine Hagerstown x x Physicians, LLC Kotch Stephen J. MD Washington County Emergency Emergency Medicine Hagerstown x . Physicians, LLC ._- - ---
Exhibit 2 3 TriState Physicians and Physicians with WCHA Privileges La~t'~;> 1!!l'!it: •.•••.•.. MI~~1!t ..•<. I]:;·><t~ 'P~yslc,ansPractlceGrOup Sp~laltyl)es~r1p~on.,.·;.· pn~~~:. W~HA: WCHS.· TrlSta~ . .Other :.;":'::;;; ,":*,"" ,." :,/,,~.:' .. ~>:'.: ::< ", .";::~;~:f; ·~o,rt· · elil~;~.• TriState Cp~~~~~ Hosp. Prlv; ;:: . '. ","" :,,<", ."",.' 'Mem~r' : r::"/" .. , ,':/,",.,' Liferidge Aisha Towana MD Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Malik Mohammad R MD Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Mayo Douglas David MD Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC O'Mara Sean Joseph MD Washington County Emergency Emergency Medicine Hagerstown x Ph~sicians, LLC Prisk David DO Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Schruefer John Michael MD Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Stone Roger M, MD Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Twanmoh Joseph R MD Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Van Wie Donald Francis DO Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Wegner Scott A MD Washington County Emergency Emergency Medicine Hagerstown x Physicians, LLC Ellis Vicki Elaine MD Washington County Emergency Emergency Medicine, Ex Hagerstown x Physicians, LLC Folino Lucille DO Washington County Emergency Emergency Medicine, Ex Hagerstown x Physicians, LLC Fowler Sandra MD Washington County Emergency Emergency Medicine, Ex Hagerstown x Physicians, LLC Kugler R Lawrence MD Washington County Emergency Emergency Medicine, Ex Hagerstown x x Physicians, LLC Pickard Sybil Dawn MD Washington County Emergency Emergency Medicine, Ex Hagerstown x Physicians, LLC Scherer Patricia DuPuis MD Washington County Emergency Emergency Medicine, Ex Hagerstown x Ph~sicians, LLC Thompson Edward Monroe MD Washington County Emergency Emergency Medicine, Ex Hagerstown x Physicians, LLC Vandenbosche Robert C, MD Washington County Emergency Emergency Medicine, Ex Hagerstown x Physicians, LLC
Exhibit 2 4 TriState Physicians and Physicians with WCHA Privileges Last" , ~' Fl,rst <:>', Middle'·,,;;,· :n~~';>' ' :;;',~~Yslcla!l~,F''''~t!~;.Gl~UH: ' S~I~I~;~l!Crl~t1orf ' CitY, ~;; WCHA: ,WCHSI TriState " Other ..;> " ' ';,>;,j.~;>,: ' ',"< '~i>\;>" , > "". >,' '" " '; ::,>" ,·Hosp; ~9r!lployee .Tristaf,; COlltr~cted Hosp.Priv. > ,," : Pri':; ,Member ~ ': ~ .,' Womeldorf Susan MD Washington County Emergency Emergency Medicine, Elq Hagerstown x Physicians, LLC EI-Khodarv Ashraf MD Robinwood EndocrinolOQv Endocrinologv Haoerstown x x x Maldonado-Brem Adriana Catalina MD Robinwood Endocrinology Endocrinology Hagerstown x x x Lippman Steohen MD Stephen S, Lippman. MD Endocrinology HaQerstown x x Krempel-Portier Bonita DO Emmittsburg Osteopathic Primary Family Practice Thurmont x x Care Center, Inc, Uzicanin Ernest MD Ernest Uzicanin, M,D. Family Practice Hagerstown x x Guedenet Robert J.S. MD Family Medicine Center Family Practice Keedvsville x x Blash Steven J. MD Hager Park Health Center Familv Practice Haoerstown x Shranalan Larrv J. DO Hager Park Health Center Family Practice Hagerstown x Shranatan Sheila DO Hager Park Health Center Family Practice Haaerstown x Xu Guoping MD Hager Park Health Center Family Practice Haaerstown x Bui Tu MD Hagerstown Family Medicine. PC Family Practice Hagerstown x x Saxena Preeti MD Hagerstown Family Medicine PC Family Practice Hagerstown x x Saxena Saniav MD Hagerstown Family MediCine, PC Family Practice Haaerstown x x Mahmood Shahid MD Howard N. Weeks, M.D., P.A. Familv Practice Haoerstown x Weeks Howard MD Howard N, Weeks, M.D., P.A. Family Practice Hagerstown x x Qadir Ghazala MD Malik & Qadir, PA Family Practice Boonsboro x x Ditto Allen W. MD Potomac Family Medicine Family Practice HaQerstown x x Kutzera William E. MD Potomac Familv Medicine Family Practice Haoerstown x x Metzner Stephen E. MD Potomac Familv Medicine Familv Practice Haaerstown x x Strauss Kelli A. MD Potomac Family Medicine Family Practice Haaerstown x x Lvnch Robert MD Robert Lynch, MD Family Practice Martinsburg x x Beckwith Matthew MD Robinwood Familv Practice Family Practice Haaerstown x x x Brown Stephanie Denise MD Robinwood Familv Practice Familv Practice Haoerstown x x x Joy Teresa M. DO Robinwood Family Practice Family Practice Haoerstown x x Patalinahua Neal MD Robinwood Family Practice Famiiy' Practice Hagerstown x x x Rovster William E. MD Robinwood Family Practice Family Practice Haaerstown x x x Bodenheimer William F. MD South Mountain Family Practice Family Practice Boonsboro x x Hahn Matthew MD TriState Community Health Center Familv Practice Hancock x Datta Vasant MD Vasant Datta, MD Familv Practice Funkstown x x Haeckler Barbara MD Walnut Street Community Health Family Practice Hagerstown x Center Koilpillai Gnanaraj MD Walnut Street Community Health, Family Practice Hagerstown x Center
Lalit. , .}>'If'~t .. ' IMi~j2)\: Rioole Martha Gallow Gary Rettig Stephen Stewart, III Joseph Buchanan Sarah Ciccarelli K. Jill Gibson Matthew Howard Rao Samuel Javakara Bolarum Praveen K. Cremins James Ferreira Nelson L Lewis Christine P. Tayler Juan A. Enam Pear M Trace Robert J Graves William Milroth William Uchino Itsuro John Chanev Charles R. Sachs Stephen M. Collins Frank J Hobart Dona C. Nauven Anhtai H. Su William T. Weinberg Daniel J. Riggle Karl P. Omeish Esam S. Kross Marc E. Espinoza IAlida Exhibit 2 5 TriState Physicians and Physicians with WCHA Privileges '+:::.' ..... , ".i'··.I:PSI~~Z;~j:ri!!I;~f·····.I~!<;·~·:,~;t~) :;"'~;;:;:·'~i'~;~.I&~~~~~~.·.lil:~~;I~:;~;~.I.H.;;;IV. MD I Walnut Street Family Practice MD IWaynesboro Family Medical Associates MD IWaynesboro Family Medical Associates MD IWaynesboro Family Medical Associates MD IWilliamsport Family Practice MD IWiliiamsport Family Practice MD IWiliiamsport Family Practice MD IWilliams~rt Family Practice MD MD I Digestive Disorders Consultants MD I Digestive Disorders Consultants MD I Digestive Disorders Consultants MD IDlgestive Disorders Consultants MD IGastroenterology Associates MD I Robert J. Trace, MD MD IGraves Medical Practice MD IWilliam Milroth. MD MD ICenter for Vein Medicine MD ICharies R. Chaney, M.D. MD I Hagerstown Surgical Clinic MD IPotomac Surgical Specialists, LLC MD IPotomac Surgical Specialists. LLC MD IPotomac Surgical Specialists, LLC MD IPotomac Surgical Specialists. LLC MD IPotomac SurgiCc!ISpeci~lists, LLC MD ITriState Surgeons, LLC MD IEsam S. Omeish, M.D. MD IMarc E. Kross, MD MD IAntietam Oncology and Hematology GroIJP, PC Famlli' Practice Family Practice Family Practice Family Practice Family Practice Family Practice Family Practice FamilyPractice Family Practice Gastroenterology Gastroenterology GastroenteroJ~ Gastroenterology Gastroenterology Gastroenterology General Practice General Practice General SurgerY_ General Surgery GeneralSu~ General Su~ry_ General Surgery General Surgery General Surg~ GeneralSu~ General S~ry_ General Surgery, Trauma General Surgery, Trauma Hematology/Oncology Hagerstown x Waynesboro x x Waynesboro x x Waynesboro x x Williamsport x x Williamsport x x x Williamsport x x x Williamsport x x x Hagerstown x Hagerstown x x x Hagerstown x x x Hagerstown x x x Haaerstown x x x Haaerstown x x Haaerstown x x Berkeley Springs x x McConnellsburg x x Hagerstown x Haaerstown x x Hagerstown x x Hagerstown x x Haaerstown x x Haaerstown x x Hagerstown x x Hagerstown x x Haoerstown x x Hagerstown x Hagerstown x x x Hagerstown x x
Exhibit 2 6 TriState Physicians and Physicians with WCHA Privileges ~st .?:-;- ...• Fi~~'</, ..... Middle " .. Ir-~~~.;>· "'y'ffl"YtilclansP~ctlc;e ~ro~p SPElc!alty;f)es~~Ptlt;'"> I~~~[~l~~'~;:(.: ...... WCftA .wC;H$1 . ....:... Trl~te Other I ,~,):>,:;~;".,,,, ", ",,'.- " ;>.< ' <';';"',' '" .' ~:.~> eniploy~ TrlfJ~te. CQntTac;ted 7:', » ..::>' ' .. I, ...••... <', ...'.: :Mem~r H,o.sp_ PriV. Hamdan Hind MD Antietam Oncology and Hematology Hematology/Oncology Hagerstown x x Group, PC Kass Frederic H MD Drs Newman, Wooster, Kass, Hematology/Oncology Hagerstown x x Bradford & McCormack PA McCormack Michael J. MD Drs Newman, Wooster, Kass, Hematology/Oncology Hagerstown x x Bradford & McCormack PA Aayako-Wiredu David A. MD Osler Inoatient Services Ho~talist Haqerstown x x Baran Mark S. MD Osler Inpatient Services Hospitalist Haqerstown x x Daniels Francisco A. MD Osler Inpatient Services Hospitalist Haaerstown x x Hubblv Madhavi MD Osler Inpatient Services Hospitalist Haaerstown x x Kalka Jaroslaw R MD Osler Inoatient Services Hospitalist Hagerstown x x Kurapaty Mercy S MD Osler Inpatient Services Hospitalist Haqerstown x Mbaoua Judith MD Osler Inpatient Services Hospitalist Haaerstown x x Syed Gaffar A MD Osler Inpatient Services Hosoitalist Haaerstown x x Delaoortas Dino J. MD Dr. Dino J. Delaoortas, PA Infectious Disease Haaerstown x x Asmar Pierre MD Pierre Asmar, MD Infertility/Reproductive Annandale x x Endocrinology Cohen Barrv M. MD Barry M. Cohen, MO Internal Medicine Haaerstown x x Kuttner·Sands Cynthia MD Cynthia Kuttner·Sands, MD Internal Medicine Hagerstown x x Higginbotham Lisa Kathleen MD Dr. Oino J. Delaoortas, PA Internal Medicine Haaerstown x x Bradford Pamela F. MO Ors Newman, Wooster, Kass, Internal Medicine Hagerstown x x Bradford & McCormack PA Hurwitz Jeffrey O. MD Ors Newman, Wooster, Kass, Internal Medicine Hagerstown x x Bradford & McCormack PA Newman George C. MO, PhD Ors Newman, Wooster, Kass, Internal Medicine Hagerstown x x Bradford & McCormack PA Monev Mary E. MO Drs. Waldman & Monev PA Internal Medicine Haaerstown x x Murshed Farid MO Farid Murshed, M.O. Internal Medicine Hagerstown x Andrade Francisco L. MD Francisco Andrade, MO Internal Medicine HaQerstown x x Hanif Rashid MD Gastroenterology Associates Internal Medicine Haaerstown x x Theodoru Radu M MD Haqer Park Health Center Internal Medicine Haaerstown x Peprah Koduah MD Internal Medicines Physicians, P.A Internal Medicine Hagerstown x Correces Jerri l MO Jerry l. Correces, MO PC Internal Medicine Hagerstown x x Waseem M. Khalid MD Khalid M. Waseem, MD Internal Medicine Haaerstown x x Malik Zafar M MD Malik & Qadir, PA Internal Medicine Boonsboro x x
u.1i(" FIi;St::
Bansal Rina
Shafi Manzar
Brull Robert
HatiebelfL Steven
Krishnamoorthy Mahesh
McDougal Dan
Sluder Colleen
Chan Samuel
Pasha Tanvir
Brown-Tisdale Chuckia
Bonham Brian
Brown Gail
Cantone Vincent
Henderson Laura
Kerns William
Reed John
Reeves Inez
Sukumar Minakshi
Anadu Juliet
Gomez Prosper Laura
Koso-Thomas Marion
Ngwana-Mondoa Theresa
Ni9.am Madhu
Rost James
Uddin Zia
Johnson William
Mishra Tanuia
Romanic Branislav
Exhibit 2 7
TriState Physicians and Physicians with WCHA Privileges
Mldc!I,~':> ':"ITIU~'5Tl,' f'hyslc~ns pracUce Group -rpeclalty~D.rJP~IOn~~---1 ::~ IWCHSI I I TriState I Other
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H. MD
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ManzarJ. Shafi. MD .. PA IInternal Medicine I Hagerstown x
ManzarJ. Shafi. MD., PA Iintemal Medicine IH~erstown
Robert Brull, MD. PA ilnternal Medicine IHagerstown
Robinwood Internal Medicine /Internal Medicine I Hagerstown
Robinwood Internal Medicine I Internal Medicine I Hii!Q!!rstown
Robinwood Internal Medicine /Internal Medicine IHagerstown
Robinwood Internal Medicine linternal Medicine I Hagerstown
Samuel Chan, MD /Internal Medicine I Hagerstown
TanvirA. Pasha. MD IInternal Medicine IH~erstown
Women's Specialty Associates !Internal Medicine I Hagerstown
Smithsburg Family Medical Center I Internal Medicinel ISmithsburg
Pediatrics
Smithsburg Family Medical Center I Internal Medicine!
Pediatrics
Smithsburg Family Medical Center IInternal Medicine!
Pediatrics
Smithsburg Family Medical Center Iintemal Medicinel
Pediatrics
Smithsburg Family Medical Center Iinternal Medicinel
Pediatrics
Smithsburg Family Medical Center !Internal Medicinel
Neonatology Associates. PC
Neonatology Associates. PC
NeonatolQIDI. Associates. PC
NeonatolQIDlAssociates. PC
Neonatology Associates. PC
Neonatology Associates. PC
Neonatology ASSOCiates. PC
Neonatology Associates, PC
NeonatolQ9i' Associates. PC
Kid~ C~'lter ()f Ha9.,erstown
Kidn~y Center of Hagerstown
Kidney Center gf Hagerstown
Pediatrics
Neonatal/Perinatal
Medicine
NeonatallPerinatal
Medicine
Neonatology
NeonatolQIDI.
NeonatolQ9Y,
Neonatol()gy
Neonatology
Neonatology
Neonatology
Nephrology
Nephrol~
Nejlhrolo,ID'
Smithsburg
Smithsburg
Smithsburg
Smithsburg
Smithsburg
Hagerstown
Hagerstown
Hagerstown
H~erstown
H~erstown
Hagerstown
Hagerstown
Hagerstown
Hagerstown
H~erstown
H~erstown
Hi!gerstown
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
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x
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x x
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Exhibit 2 8
TriState Physicians and Physicians with WCHA Privileges
4-s~ !~~~';~:;G'J~;, •• ""J~~le ',1'';;' TItle ,<;,:r'j ~;i;i:;ebri\l;'!lris Practlce'$~up' ..' ." SpeclaltyDes~rlption" ~'tr,:<>:'<:3{ WCIiA WCHSI" .,":: , TriS~~ Other
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::~, >. :;::)";' '~,j2;;t<':;~:'<'::: .•',\ ';:;i;;: , ... . ,'>::<'::::;'Y': "'.; ;::;:if ':/', ..H~:!Zr; '''!11ploy~, . TriStlitlt' :gPJ1.tra~,~~ Hosp. Prlv.
.. '. .. ',' . .Member . ""<
Adler Oscar MD PhD Meadow Kidney Care NephroloQY Haaerstown x
Nahar Anita MD Meadow Kidney Care NephrolQgi' Hagerstown x x
Roza Eli MD Meadow Kidney Care Nephrology HaQerstown x x
Welch Paul G. MD Meadow Kidney Care NephroloQY Haaerstown x x
Khan Mehrullah MD Antietam Neurology Center, PA NeuroloQ}' Haoerstown x x
Anwar Sam ina MD Neurology Consultants, PA Neurology Haaerstown x x
Furlow Thomas W MD Parkway Neuroscience and Spine Neurology Hagerstown x x
Institute
Dave Prafull K MD Prafull K Dave, M.D. Neurology x
Mir Sarim MD Sarim R Mir, MD, PA, Inc. Neurology Haoerstown x
Ali Jamal MD Tristate Neuroloov Center NeuroloQY Haaerstown x x
Caruso John Robert MD Parkway Neuroscience and Spine Neurosurgery Hagerstown x x
Institute
Holmes Brian MD Parkway Neuroscience and Spine Neurosurgery Hagerstown x x
Institute
O'Malley Neil P. MD Parkway NeurOSCience and Spine Neurosurgery Hagerstown x x
Institute
Radley Michael G MD Parkway Neuroscience and Spine Neurosurgery Hagerstown x x
Institute
Sachariah K. George MD K. George Sachariah, M.D. & Nuclear Medicine Hagerstown x x
Associates, PA
Maoram Martin Y. MD Martin Y. MaQram, M.D. Nuclear Medicine Haaerstown x x
Reba Richard C. MD Richard Reba M.D. Nuclear Medicine Frederick x
Hudson Chad MD, PhD Comprehensive Women's Care OB/GYN HaQerstown x x
Kothari Mitesh MD Comprehensive Women's Care OB/GYN Haaerstown x x
Oh Andrew J. MD Comprehensive Women's Care OB/GYN Haaerstown x x
Solbem David H. MD Comprehensive Women's Care OB/GYN Haaerstown x x
Marlaer Georae E., Jr. MD George E. Manger, Jr., MD PA OB/GYN Hagerstown x x
Rider Lvnn A. MD Lynn A. Rider, MD, PA OB/GYN HaQerstown x x
Ginter Hilary W MD Mid-Atlantic Women's Health Center OB/GYN Hagerstown x x
Greenberg Jay B. MD Mid-Atlantic Women's Health Center OB/GYN Hagerstown x x
Tramontana Ann M. MD Mid-Atlantic Women's Health Center OB/GYN Hagerstown x x
Rosenshein Neil B. MD St. Paul Place Specialists OB/GYN Baltimore x x
I.<Ist first ~JMlddl~,,'~>:~£?~~e, Andele Adjoavi (Bella) Fakonam IMD Hamilton William elMO Riddell Scott Robert IMD Smith Gary W. IMD Mullick Jowheri MD Fanale Jack Michael IMD Bergman Erik A. IMD Henrv John Christopher IMD Patel Chetankumar Bhikhubhai IMD Wroblewski John J. IMD Edmonds Craig MD Keener Wilmer J. IMD Facchina Stephen MD Danziger Peter F. IMD Tash Dara MD Pames Robert E. MD Glaser Stephen R MD Jensen Allison MD Nelson Howard DDS Pike Jon DDS Russell W. Dean DDS Zwack William DDS Pearlman Jeffrey DDS Behan Richard L. DDS Koterwas Gary E. DDS Exhibit 2 TriState Physicians and Physicians with WCHA Privileges I'.··· p:~~~~~:~~":praC!~I\f~~P:. ..lspeCj~j$fr.PUO; ';:I~7:.: ... Women's Health Center at IOB/GYN I Hagerstown Robinwood Women's Health Center at Robinwood Women's Health Center al Robinwood Women's Health Center at Robinwood Women's Specialty Associates Bergman Eye Associates Bergman Eye Associates Cumberland Valley Retina Consullants, PC Cumberland Valley Retina Consultants, PC Hagerstown Eye Specialists Hagerstown Eve Specialists Ludwick Eye Center Peter F. Danziger, MD, PA Retina Center of Westerri .Maryland Robert E. Pames, M.D., L.L.C. Associated Oral & Maxillofacial Surgeons Associated Oral & Maxillofacial Surgeons Associated Oral & Maxillofacial Surgeons Associated Oral & Maxillofacial Surgeons Jeffrey Pearlman, D.D.S. Oral & Facial Surgerv Oral & Facial Surgerv OB/GYN OB/GYN OB/GYN OB/GYN OB/GYN Ophthalmology QIlllthall'Tl9logy Ophthalmology Ophthalmology Ophthalmology Ophthalmology Ophthalmology Ophthalmology Ophthalmology ~hthalmology QIlI11halmology Ophthalmology Oral & Maxillofacial S~ Oral & Maxillofacial Surgery Oral & Maxillofacial Surgery Oral & Maxillofacial Surgery Oral Surgery Oral Surgery Oral Surgery Hagerstown Hagerstown Hagerstown Haaerstown Hagerstown Hagerstown Hagerstown Hagerstown Haaerstown Hagerstown Chambersburg, PA Hagerstown Hagerstown Haaerstown Hagerstown Martinsburg Martinsburg Hagerstown Haaerstown Haaerstown Haaerstown 9 WCHA,\·.·'WCHS'··'·I ~~C I TriState I. Other . H.OSP,.'·.:·' .'... '!11.... p. 10..¥~ .·.·.Tr!State.·g~n~9tMtt~sP. Priv. . Prill.' '. > ': . .' 'Member x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x
Exhibit 2 10
TriState Physicians and Physicians with WCHA Privileges
L.ast> "» ' F~g;;l"/ ';'< ,'( Middle'" ntle ' ' ;~';;~hyslcian~ p~ctice,Gr9up:,~,;, ~peClaItyO.es~rlptll)JI' c:if¥
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>, ';,"/j'< ".:.<. Mt.mbitr '" Kramer Richard E. DDS Oral & Facial Surgery Oral Surgery Haaerstown x x
Rothen Roberta L. MD Center for Joint Surgery & Sports Orthopaedic Surgery Hagerstown x x
Medicine
Salvagno Ralph T. MD Center for Joint Surgery & Sports Orthopaedic Surgery Hagerstown x x
Medicine
Amalfitano Thomas G MD Mid-Atlantic Orthopaedic Specialists, Orthopaedic Surgery Hagerstown x x
PC
Cirincione Robert J. MD Mid-Atlantic Orthopaedic Specialists, Orthopaedic Surgery Hagerstown x x
PC
Edwards Bruce N. MD Robinwood OrthopediC Specialists Orthopaedic Surg~ry Haaerstown x x
Holobinko Joseoh Newton MD Robinwood Orthopedic Specialists Orthopaedic Surgery Hacierstown x x
Patterson Donald A. MD Robinwood Orthopedic Soecialists Orthopaedic Surgery Haaerstown x x
Winslow Michael A. MD Robinwood Orthopedic Specialists Orthopaedic Surgery Haaerstown x x
Worrell Scott P. MD Robinwood Orthooedic Specialists Orthopaedic Su~ Hagerstown x x
Brooks Robert L. MD PhD Washington County Hospital Orthopaedic Surgery Hacierstown x
Milford Richard S. MD Mid-Atlantic Orthopaedic Specialists, Orthopaedic Surgery, Hagerstown x x
PC Hand
Stowell Michael T. MD Mid-Atlantic OrthopaediC Specialists, Orthopaedic Surgery, Hagerstown x x
PC Hand
Sherman Garv M. MD Robinwood Orthopedic Specialists Orthopaedic Surgery. Ha Haaerstown x x
Suoernavaae Charles J. MD Charles J. Suoernavaae. MD. PC Otolarvngology Haaerstown x x
Manilla Anthony Christopher DO Cumberland Valley ENT Consultants Otolaryngology Hagerstown x x
McMahon Steven J. MD Cumberland Valley ENT Consultants Otolaryngology Hagerstown x x
Saylor Michael J. MD Cumberland Valley ENT Consultants Otolaryngology Hagerstown x x
Wathne Jarl T MD Cumberland Valley ENT Consultants Otolaryngology Hagerstown x x
Bandy Bibhas C. MD Hagerstown Ear, Nose & Throat Otolaryngology Hagerstown x x
Associates
Olenczak John Edward MD Mid-Atlantic Orthopaedic Specialists, Pain Management Hagerstown x x
PC
EI-Mohandes Ali MD The Spine Center at the Center for Pain Management Hagerstown x x
Pain Management
last, First: . 7·IMidd,-'-:T::ITftI",<>J· Loev Marc A MD Demosher Chris J, MD Mire Gary M. MD Newby John G MD O'Donoohue Michael J. MD Amponsem Anthony Amankwa MD Athey Kristina A. MD Dwyer Ruth Choate MD Oakley Julia D MD Weaver Leon D. MD Saif Naheed F. MD Khan Shafaat u. MD lafolla Ayne Kimberly MD Mustafa Mahmoud A. MD Obidi Chukwuemeka MD Masood Saaib MD Dawis Maria A~lIles MD Shinaishin Ahmed MD Strauss Albert J MD Becker M. Douglas MD Budi Atchuthanand MD Shuster Paul E MD Weiss Robert E. MD Collins Gary Joseph MD Sullivan Daniel J. MD Efobi Ngozi Juliet MD Yacyk Mark J DO Exhibit 2 TriState Physicians and Physicians with WCHA Privileges 'PIlYSlclan,s Pl!!l:tlte~l1l~p' <\<,,' J;" '"«'.~':)~};'.' The Spine Center at the Center for Pain Management John G. Newby, MD, PC John G. Newby, MD, PC John G. Newby, MD. PC John G. Newby, MD. PC Anthonv Amponsem, M.D. Antietam Pediatric & Adolescent Care Antietam Pediatric & Adolescent Care Antietam Pediatric & Adolescent Care Antietam Pediatric & Adolescent Care Clinic for Children, PA Hagerstown Pediatrics Neonatology Associates, PC Partners in Pediatrics Partners in Pediatrics The Children's Doctor The Children's Doctor, LLC The Children's Doctor, LLC The Children's Doctor, LLC Weiss, Becker & Shuster Weiss, Becker & Shuster Weiss, Becker & Shuster Weiss, Becker & Shuster Parkway Neuroscience and Spine Institute Parkway Neuroscience and Spine Institute Physical Medicine Specialists Physical Medicine Specialists '/ Sp.,cll!lty[)e!ic~pyo~'lqltY ,., •..• '... Pain Management Pathology Pathology PatholQQY. Pathology Pediatrics Pediatrics Pediatrics Pediatrics Pediatrics Pediatrics Pediatrics PediatriCS Pediatrics Pediatrics Pediatrics Pediatrics Pediatrics PediatriCS Pediatrics Pediatrics Pediatrics Pediatrics Physical Med'! Rehabilitation Physical Med.! Rehabilitation Physical Med.! Rehabilitation Physical Med.l Rehabilitation Hagerstown Haaerstown Haaerstown Haaerstown Haaerstown Haaerstown Hagerstown Hagerstown Hagerstown Hagerstown Haaerstown Haaerstown Haaerstown Haaerstown Hagerstown Haaerstown Haaerstown Haaerstown Hagerstown Haaerslown Haaerstown Haaerstown Haaerstown Hagerstown Hagerstown Hagerstown Hagerstown 11 '.;I:jf~~·I:jI:~;i~~\I'.··MTti~tabe.t!il,I·C;~~~~Qd 1'1;:~i~.•.. ·PrlV..'; ';' ';. em r·;·· :,.i.; . . . .. x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x
Exhibit 2 12 TriState Physicians and Physicians with WCHA Privileges Last,:; .•·.·· ··;«I~I~PcI1~IClaI1S;p,.¢tice.Group:.· '. Sp~iaJi:yiQ~r,lptIOIl . I'·}rl$tate I Other -'. - .... "')':);'+' ··~,.··t~: ':f:..• :;;;~;· ··~~~~~~•• g~lnIcted Hosp.·Prlv. Kosuri Ramakrishna R Albertoli James S. Herrera Aryeh L Garazo Henry Dimercurio Salvatore Michaels Daniel D. Sanicola Charies P. Sanicola Karen F. Harrison Todd A. Herman Dale S. Roemer Mark A. Rosenthal Betsy F Smith Gregory A. Holdawav Peter J Seliaman Garrv Waqner Matthew Zerla Aurelio S. Jurand Joseph A. Bover-Patrick IJudith CarrHI IJohn Relacion IVai erie Kurz I Corriene Gonzalez-Cawlevl David Fawaz IJamal MD IRobinwood Orthopedic Specialists I Physical MedJ MD MD MD MD DPM DPM DPM DPM DPM DPM DPM DPM DPM MD MD MD MD MD MD MD MD MD MD Allegheny Center Reconstructive Surgery Allegheny Center Reconstructive Surgery Plastic Surgery Services Salvatore DiMercurio, MD, PA Daniel D. Michaels, DPM. MS, LLC Rehabilitation Plastic Surgery Plastic Surgery Plastic Surgery Plastic Surgery Podiatry Drs. Charles P. & Karen F. Sanicola.IPodiatry DPM, PA Drs. Charles p" & Karen F. Sanicola, IPodiatry DPM, PA Podiatry Associates of Hagerstown IPodiatry Podiatry Associates of Hagerstown IPodiatry Podiatry Associates of Hagerstown I Podiatry Podiatry Associates of Hagerstown IPodiatry Podiatry Associates of Hagerstown IPodiatry Scotland Podiatric Behavioral Health Services Behavioral Health Services Behavioral Health Services Behavioral Health Services of Washington County Brooklane Health Services Brooklane Health Services Brooklane Health Services Corriene V. Kurz. MD David Gonzalez-Cawley. MD Jamal Fawaz, MD Podiatry P§i'.chiatrv Psychiatry P~hisllY. Psychiatry P§Y.chialrv P~_cI1iallY. Psychiatry Psychiatry Psychiatry Psychiatry Hagerstown x x Hagerstown x Hagerstown x Hagerstown x x HaQerstown x x Hagerstown x x Hagerstown x x Hagerstown x x Hagerstown x x Hagerstown x Hagerstown x x Hagerstown x x Hagerstown x x Hagerstown x Hagerstown x x x Hsoerstown x x x Hagerstown x x x Hagerstown x Haoerstown x x Hagerstown x x Hagerstown x x HaQerstown x x HaQerstown x x HaQerstown x x
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Hauser
Mazzei
Zimmerman
Bean
Diehl
Hesley
Marinelli
Murthv
Muthiah
Rossini
Saba. III
Vu
Aarawal
Chow
Hsu
Johnson
Leimkuhler
Smith
Exhibit 2
TriState Physicians and Physicians with WCHA Privileges
First.
I Middle ':~~~n~f\-~ifd .. rhYS';~J~"27.~~,~r~up:.:, .\ '........ '....,;: ~
Mohammaed
William
James
Daksha
Amv Jo
L. Dwight
Kalim
Johny P
Shaheen
Abdul
Dan R
Ebrahim
Francis J.
Craig Michael
Robert E.
Gregorv S
Marchelle June
Sleven L.
Kerri
Paul C.
Narasim
Annamalai{Annam)
Michael (V
Georlle IP
TrunQ 10.
Gautam
Lawrence ChanQ-Lun
Ravmond M.
GreQorv Llovd
Melissa Mav
Christopher Leon
MD IMohammed Z. Latif, MD I Psychiatry
MD IWiliiam G. Prescott, MD IPsychiatry
MD Ip~
MD IP§ychiatry
PhD (Psychology
MD IDrs Newman, Wooster, Kass, IPulmonary Rehab
Bradford & McCormack PA
MD
MD
MD
MD
MD
MD
MD
M.D.
DO
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
Pulmonary Consultants of
Hilgerstown
Pulmonary Consultants of
Hagerstown
Pulmonary Consultants of
Hagerstown
Pulmonary Consultants of
Hagerstown
John R. Marsh Cancer Center
John R. Marsh Cancer Center
Associated Radiologists. PA
Associated Radiologists, PA
Associated Radiologists, PA
Associated Radiologists, PA
Associated Radiologists, PA
Associated Radiologists, PA
Associated Radiologists, PA
Associated RadiologiSts. PA
Associated Radiologists. PA
Associated Radiologists, PA
Associated Radiologists, PA
Associated Radiologists. PA
Pulmonary Rehab
Pulmonary Rehab
Pulmonary Rehab
Pulmonary Rehab
Radiation OncolQID'.
Radiation OncolQ9Y
Radiology
RadiolollY
Radiology
RadiolQ~
Radiology
Radiology, Diagnostic
Radiology, Diagnostic
Radiology, Diagnostic
Radiology, Diagnostic
Radiology. Diagnostic
RadiolollY, Diagnostic
Radiologv, Di~nostic
RadiolQ~gnostic
Radiolo~i?gnostic
Radiology. Diagnostic
Radiology. Diagnostic
RadioloQY. Diagnostic
Radiology, DiClQnostic
RadicliogYLPiagnostic
Hagerstown
Hagerstown
Hagerstown
Hagerstown
Hagerstown
Hagerstown
Hagerstown
Hagerstown
Hagerstown
Hagerstown
Haaerstown
Hagerstown
Hagerstown
Hagerstown
Hagerstown
Haaerstown
Haaerstown
Haaerstown
Hagerstown
Hagerstown
Haaerstown
13
x x
x x
x x
x x
x
x x
x x
x x
x x
x x
x x
x
x x
x
x x
x x
x
x x
x x
x x
x x
x x
x x
x
x x
x
x
x
x
x
x
La.,t Klein Howell Chomiak Radecki ChaudhrY Dennis Hackett McWilliams Talton Hassoun Roaers Exhibit 2 14 TriState Physicians and Physicians with WCHA Privileges IFlrs~::iSU"'~" 1 ~!~tle, /eJte~::::r TF~~'CJa:~;~,~p~ce; Group Steven IJ MD Malamet & Klein. MD. PA Mary MD Paul N, MD The Center for Chest Disease Kevin Michael MD The Center for Chest Disease M, RafiQue MD The Urological Center Patrick J. MD The Urological Center Kevin C. MD The Urological Center Wavne A, MD The Urological Center Hugh J, MD The UrolQgical Center Heitham Talal MD Heitham Hassoun. M,D. John Paul MD Wound Center ~pe.c"'ltyDe~rlptJOri ~'::~~F~!):',~':' ,". ,'. ~<t:~.~,g, ,~." Rheumatology Rheumatology Surgery. Thoracic Surg~ry L Thoracic Urology Urology Urology, Urology UroloQV Vascular Su~~ Wound Care ICIlY); \ , ,; ;"1 WCHA I VtlCHSI 'I' , , "I Tri~tate I Other Y;j&!:::';,;~;H;,~::...~~e~¥~r ,~:~:~~~cted HosP· Prlv. Hagerstown x x x Haaerstown x Hagerstown x Haaerstown x x Haaerstown x x Hagerstown x x Haaerstown x x Haaerstown x x Baltimore x Haaerstown x x
Exhibit 3
Exhibit 3: Washington County Health System. Inc.
WCHSI is a private, non-profit corporation formed under the laws of the
State of Maryland in 1989. WCHSI has over 3,000 employees and serves a tri-
state region, including western Maryland, southern Pennsylvania, and northern
West Virginia.
1. Washington County Hospital Association C4
WCHA") - a private, non-
profit, membership corporation formed under the laws of the State of Maryland operating
an acute care hospital, WCH, and related facilities located in Washington County,
Maryland. WCH opened in 1904 on Potomac Avenue in northern Hagerstown, with a
complement of ten beds and a medical staff of six members.
WCHA provides hospital and healthcare services to the citizens of Washington
and Frederick Counties in Maryland, Franklin and Fulton Counties in Pennsylvania, and
Morgan, Jefferson and Berkeley Counties in West Virginia. WCHA is currently licensed
to operate 292 beds to include 218 medical/surgical. 18 obstetric, 10 pediatric, 18
psychiatric, and 28 acute rehabilitation. WCH offers inpatient and outpatient services
including adult medical/surgical care, obstetrics and newborn care (including a family
birthing center), cardiac catheterization, comprehensive inpatient and outpatient
rehabilitation, radiologic/diagnostic services, inpatient and outpatient mental health
services, a regional Level III Trauma Center, an intensive care unit, a progressive care
unit, a coronary care unit and a pediatric inpatient unit.
WCH is home to the Center for Joint Replacement, an innovative three-day
program for hip and knee joint replacement which involves a team approach to education,
care and recovery, and the John R. Marsh Cancer Center which provides ambulatory
cancer therapy with 18,000 patients visits annually including chemotherapy, infusion
therapy, blood transfusions and radiation seed treatments.
Other specialty services include: The Gynecologic Center of Western Maryland,
providing evaluation and treatment services by a nationally recognized expert in
gynecologic cancers and a pioneer in the field; comprehensive rehabilitation services,
providing a full range of rehabilitation programs across service levels with locations at
the Hospital, the Robinwood Medical Center campus, and its Health@Work facility on
the west end of Hagerstown; behavioral health services including an Employee
Assistance Program; and, mental health services for every age including adult inpatient
programs at the Hospital and outpatient services. Specialty at-home services include
"Care at Home", a fee-for-service personal care program, and "Home Health" for skilled
nursing, rehabilitation services and oxygen therapy_ All services are accredited by
JCAHO.
2. Antietam Health Services ("AHS") - a wholly owned subsidiary of
WCHSI. It was incorporated under the laws of the State of Maryland in 1985 as a for-
profit corporation. Antietam has been involved in the development and operation of
specific business enterprises related to the provision of outpatient healthcare that
complement the goals and objectives ofWCHSI, including medical retail, home medical, corporate health and management services. Antietam's business units include joint ventures, contractual management arrangements and direct ownership of businesses plus development and management of the Robinwood Medical Center. Robinwood is an approximately 373,000 square foot outpatient facility located 3.2 miles from WCH. Robinwood is designed to provide comprehensive, state-of-the-art health care in a comfortable, relaxed environment. The facility offers patients "one-stop shopping" where they can access many services all at the same location. The Robinwood facility is organized under a condominium regime. Unit owners include WCHA and various private providers of health care services, including physicians and dentists. The facility houses physician practices owned by WCHA and AHS. WCHSI owns approximately 44% of the Robinwood Medical Center square footage directly through its various subsidiaries or their business units. As a fully-integrated health care delivery system, WCHSI has numerous business units and joint ventures affiliated with WCHA or AHS. A summary of these units follows: ENTITY AFFILIATION DESCRIPTION Behavioral Health Services WCHA Employee Assistance Program, Alcohol and Drug Program, employed physicians, psychologists and counselors, inpatient and outpatient services Cardiac Diagnostic Center WCHA Located at Robinwood Robinwood Endocrinology WCHA Robinwood tenant. Employed endocrinologist and comprehensive diabetes education center. Home Health Care WCHA Private duty, nursing, and rehab care in home. Located off-site on Howell Road. Maryland Neuro Rehab WCHA Inpatient and outpatient day program at Foundation Robinwood for brain and spine injury recovering patients. Robinwood MRI WCHA Located at Robinwood; open MRI. Total Rehab Care at Robinwood WCHA Physical/Occupational/Speech!Aqua therapy. Urgent Care at Robinwood WCHA Located at Robinwood Urgent Care at Pennsy Ivania Ave. WCHA Located on north end of Hagerstown. Women's Health Center at WHCA Located at Robinwood. Five employed OB/GYN Robinwood physicians and five employed nurse midwives. Chiefly serve the underserved population. WCH Trauma Physicians WCHA Nine contracted trauma surgeons to provide 2417 trauma coverage.
ENTITY AFFILIATION DESCRIPTION Hagerstown Medical Lab AHS Full service reference lab with ten draw stations in Washingion County and one in Frederick County plus staff and serve the Hospital. Medical Practices of Antietam AHS Employ primary care physicians in 6 offices (2 at Robinwood, 2 in Hagerstown, and 1 each in Williamsport and Smithsburg), plus a gastroenterology and a gynecology/women's primary care practice. Home Care Phannacies AHS Full service retail pharmacies with six locations in Washington County including at the Hospital. Robinwood Infusion Pharmacy AHC Located at Robinwood. Equipped for Life AHS Full service DME company with four locations in Washington County and one in Chambersburg, PA. Health@Work, LLC AHS Located on Downsville Pike on the west end of Hagerstown, provides corporate clients with occupational medicine, industrial medicine rehab, EAP services, drug screenings, employee physicals, and on-site medical clinics. Diagnostic Imaging Services, AHS-50% Joint venture with locations at Robinwood- LLC including Women's Imaging Center - and at Eastern Boulevard in Hagerstown, site of numerous private physician offices. Robinwood Surgery Center, LLC AHS-68% Joint venture located at Robinwood with six OR's and four special procedure rooms. Employs anesthesiologists and CRNA's. Endoscopy Center at Robinwood AHS-owned Joint venture located at Robinwood with four 50% by Surgery endoscopy suites. Center Mid-Maryland Medical AHS-33.3% Joint venture ground ambulance company serving Transport, LLC Washington and Frederick Counties. Other owners are Frederick Memorial Health System and Valley Regional Enterprises in Winchester, VA. Western Maryland Medical AHS-50% Joint venture DME company. Equipped for Life Supply. LLC is managing partner. Other owner is Western Maryland Health System in Cumberland, Maryland, about 75 miles west of Hagerstown. 3. Maryland Physicians Care -WCHA owns 25% of Maryland Physicians Care, a Maryland Medicaid HMO serving in excess of 90,000 members in Maryland and
about 9,000 in Washington County. Other partners include St. Agnes Hospital and Maryland General Hospital in Baltimore, and Western Maryland Health System in Cumberland, Maryland. Maryland Physicians Care also manages, on behalf of the state, a Primary Adult Care (PAC) Program and a Medicare Advantage plan for the special- needs, dual-eligible population in the western Maryland counties of Washington, Allegheny, and Garrett. Currently, there is no formal affiliation between TriState and MPC; however, there are discussions regarding the sharing of, and providing access to, claims data. 4. Walnut Street Community Health Center- WSCHC unti12004 was a group of family practice physicians employed by WCHA and located about 2 miles north of WCH in an underserved part of Hagerstown. In 2004, the Center was granted . Federally Qualified Health Center status and became an independent business. WCHA and AHS provide services to the Center, and the Center physicians are members of TriState.
Exhibit 4
Exhibit 4: TriState's Current Board of Directors NAME CLASS TITLE SPECIALTYITITLE Datta, Vasant MD I President Prim~ Care Family Practice Hood, Stephen MD I Vice President Specialist Medicine - Cardiology Grahe, Raymond A. II Treasurer VP Finance Hospital McBurney, Brooks II Secretary VP Human Resources Hospital Hamill, James P. II Director President and CEO Hospital Brooks, Robert MD II Director VP Medical Affairs Hospital Uzicanin, Ernest MD I Director Primary Care Family Practice - Private Practice Mire, Gary_ MD I Director Hospital Based - Pathology Reed, John MD I Director Primary Care IMJPeds - Antietam Solberg, David MD I Director Specialist Surgery - Obstetrics/Gynecology Dwyer, Ruth MD I Director Primary Care Pediatrics - Private Practice Zampelli, Michael II Director VP Antietam Health Services Vacant (added 1 Director Specialist 612512007)
Exhibit 5
Exhibit 5: TriState's Administrative Staff NAME TITLE YEARS IN POSITION Field. Allan S. Executive Director 3.25 Cirincione, Robert MD Medical Director (contracted) 6.5 Atkinson, Wendy Operations Manager 2.75 Grant, Shelley Manager Care Coordination 1 Wieland, Charissa External Relations Representative I Shaw, Amanda PHO/Managed Care Specialist 9 Metzer Guylene RN Case Manager < 1 Putnam, Marlen RN Case Manager < 1
Exhibit 6
Exhibit 7
Exhibit 7: Committee Membership COMMITTEE NAME CLASS SPECIALTY Nominating Newby, John MD - Chair I Pathology Reed, John MD I Internal Med/Peds Cirincione, Robert MD I Orthopaedics/Med Dir Grahe, Raymond II VP Finance Hospital Field, Allan S. N/A Executive Director Contracting I Finance I Grabe, Raymond - Chair II VP Finance Hospital Administration Hood, Stephen MD I Cardiology Mire, Gary MD I Pathology Reed, John MD I Internal MedlPeds Zampelli, Michael II VPAntietam Field, Allan S. N/A Executive Director Wieland, Charissa N/A Staff Support - ex officio Bylaws Datta, Vas ant MD - Chair I Family Practice Malik, Zafar MD I Internal Medicine PCP Roza, EliMD I Nephrology Edwards, Bruce MD I Orthopaedics Schaeffer, Michael Esq. II Hospital Attorney Brooks, Robert MD II VPMA Hospital Field, Allan S. N/A Executive Director Wieland, Charissa N/A Staff Support - ex officio Communications Mire, Gary MD - Chair I Pathology Su, William MD I General Surgery Hudson, Chad MD I Obstetrics/Gynecology Cantone, Vincent MD I Family Practice PCP Theriault, Maureen II Dir Public Relations Hosp Field, Allan S. N/A Executive Director Wieland, Charissa N/A Staff Support - ex of&io Clinical Integration Reed, John MD - Chair I Internal MedicinelPeds Oversight Beckwith, Matthew MD I Family Practice Newby, John MD I Pathology Schiro, James MD I Dermatology Becker, M. Douglas MD I Pediatrics Cirincione, Robert MD I OrthopedicslMedical Dir Lowe, Robert PharmD I Home Care Pharmacy Field, Allan S. N/A Executive Director Grant, Shelley N/A Staff Support - ex officio Atkinson, Wendy N/A Staff Support - ex officio Credentialing Newby, John MD - Chair I Pathology Cirincione, Robert MD I OrthopaedicslMedical Dir Brooks, Robert MD VPMA Hospital Cornell, Dan MD II Radiation Oncology Field, Allan S. I Executive Director Grant, Shelley N/A Staff Support - ex officio Shaw, Amanda N/A Staff Support - ex officio N/A
COMMITTEE NAME CLASS SPECIALTY Utilization Schiro, James MD - Chair I Dermatology Management/Quality Cirincione, Robert MD I Orthopaedics/Medical Dir Assurance Becker, M. Douglas MD I Pediatrics Baran, Mark MD I Hospitalist Ciccarelli, Jill MD I Family Practice Brooks, Robert MD II VPMA Hospital Jones, Jeff MD I Cardiology Pianta, Thomas II Dir Health Mgt Hospital Barnhart, Steve II Exec Ops Antietam Lowe, Robert PharmD II Home Care Pharmacy Shea, Michael Ed.D. II Behavioral Health - Hosp Field, Allan S. N/A Executive Director Gervais, Mary Ellen N/A MMARS Davis, Mitchell N/A InforMed Grant, Shelley N/A Staff Support - ex officio Atkinson, Wendy N/A Staff Support - ex officiO Service Improvement Beckwith, Matthew MD - Chair I Family Practice Cirincione, Robert MD I Orthopaedics/Medical Dir Schiro, James MD I Dermatology Baran, Mark MD I Hospitalist Ditto, Allen MD I Family Practice Field, Allan S. N/A Executive Director Grant, Shelley N/A Staff Support - ex offiCiO Atkinson, Wendy N/A Staff Support - ex dmcio Quality Improvement Becker, M. Douglas MD- Chair I Pediatrics PCP Cirincione, Robert MD I Orthopaedics/Medical Dir O'Donoghue, Michael MD I Pathology Hesley, Kern MD I Radiology Krishnamoortby, Mahesh MD I Internal Medicine PCP Qadir, Ghazala MD I Family Practice Budi, Anand MD I Pediatrics PCP Field, Allan S. N/A Executive Director Pianta, Thomas II Dir Health Mgt Hospital Grant, Shelley N/A Staff Support - ex officio Atkinson, Wendy NJA Staff Support - ex ~JJ;cio Pharmacy Benefits Lowe, Robert PharmD - Chair II Home Care Pharmacy Management Cirincione, Robert MD I Orthopaedics/MedicaJ Dir Money, Mary MD I Internal Medicine PCP DelaportaS, Dino MD I Infectious Disease McDougal, Daniel MD I Internal Medicine PCP Am, Gary PharmD II Home Care Pharmacy Berg, Mary II Exec Ops Antietam Ellis, Denise PharmD II Home Care Pharmacy Higgins, Sue PharmD II Home Care Pharmacy llilker, Bobbi PharmD II Home Care Pharmacy Wills, Terry PharmD II Home Care Pharmacy Grant, Shelley N/A TriState Health Partners Atkinson, Wendy N/A TriState Health Partners Field, Allan S. N/A Executive Director
COMMITTEE NAME CLASS SPECIALTY Care Coordination Cirincione, Robert MD -. Chair I OrthopaedicslMedical Dir Grant, Shelley II Mgr Care Coor TriState Pianta, Thomas II Dir Health Mgt Hospital Wilkes, Kelsey II Dir Integ Pt Sup Svc Hosp Whyte, Roseann N/A InforMed Metzer, Guylene RN N/A Case Manager TriState Putnam, Marlen RN N/A Case Manager TriState Atkinson, Wendy N/A Ops Manager TriState Lowe, Robert PharmD II Home Care Phannacy Moyer, Jeanni II Total Rehab Care - Hosp Lewis, Thorrenna I Mgr Integ Pt SUP Svc Hosp During the fIrst quarter of Fiscal Year 2008, recruitment will continue for: (1) at least three private practice physicians to serve on the Contracting / Finance / Administration Committee; (2) at least two primary care physicians for the Credentialing Committee; and (3) at least two primary care physicians for the Communications Committee.
Exhibit 8
Exhibit 9
TRISTATE MEMBER
PARTICIPATING PROVIDER CONTRACT - CLINICAL INTEGRATION
This participating provider contract C'Contract") is made as of this __ day of
_____ , 200_ between Tri-State Health Partners, Inc. ("TriState"), a Maryland
nonstock corporation, and the provider identified below ("Provider"). who is a member of
TriState.
PROVIDER:
Name: -----------------------
Address: -----------------------
Telephone Number: __________________
Medical Specialty: ____________
Exhibit 10
Exhibit 10: Secondary Service Area PhYsicians TriState Non-TriState Total TriState PRIMARY SPECIALTY* Members Members Specialists Percentage Addiction Medicine 0 1 1 0% AerosIJace Medicine 0 1 1 0% Allergy, Allergy & Immunology 2 4 6 33% Anesthesiology 9 41 50 18% Cardiology, Pediatric 0 1 1 0% Cardiovascular Disease 11 20 31 35% Critical Care, Pediatric 0 1 I 0% Dermatology 3 7 10 30% EmergencyMedicine, Urgent Care Medicine 1 53 54 2% Endocrinology, Reproductive 0 1 1 0% Endocrinology/Diabetes .... 2 5 60% .) Family Practice/Geriatric Medicine 27 188 215 13% Gastroentero logy 6 11 17 35% General Practice 0 38 38 0% Immunology 0 1 1 0% Infectious Diseases 1 16 17 6% Internal Medicine 26 133 159 16% Neonatal-Peri-natal Medicine 0 9 9 0% Nephrology 3 10 13 23% Neurology - child, adult 5 14 19 26% Nuclear Medicine 2 3 5 40% Obstetrics & Gyne<.:oloM 14 47 61 23% Occupational Medicine 0 5 5 0% Oncolo~ 4 15 19 21% OJ)hthalmo!ogy 2 25 27 7% OrthopedicslHand Surgery/Sports Medicine 12 36 48 25% Osteopathic Manipulative Medicine 0 1 1 0% Other Specialty/Unspecified 0 24 24 0% Pain Management 3 2 5 60% Pathology 4 23 27 15% Pediatrics 11 69 80 14% Physical Medicine & Rehab 4 6 10 40% Psychiatry -' child, adult 3 48 51 6% Pulmonary Disease, Pulmonary.Critical Care 5 16 21 24% Radiation Oncology 1 1 2 50% Radiology 10 36 46 22% Radiology, Vascular & Interventional 0 2 2 0% Rheumatology 0 4 4 0% Sleep Medicine 0 1 1 0% Surgery, General 8 42 50 16% Surgery, Neuro 4 6 10 40% Surgery, Otolaryngology, Head & Neck 6 14 20 30% Surgery, Plastic 1 7 8 13% Surgery, Thoracic 0 4 4 0% Surgery, Urological 1 19 20 5% Surgery, Vascular 0 2 2 0% TOTAL ]92 1010 1202 16% 84% 100% Not listed In AMA Database - Oral & Mwnl!ofacla) Surgery, PodIatry
B....o orCompedtioa
600 PcuDsylv.... Ave., N.W.
Wuhlagtoa, -D.C. 10580
David M. N81TOW
Attorney
Dlred Line (l0l) 3U-~744
E-malh d ..rrvw@ftc.gov
FAX: (l01) 3U-3384
Christi I. Braun, Esquire
Ober, Kaler, Grimes & Shriver
1401 H Street, N.W.• Suite 500
Washington. D.C. 20005-3324
UNlTED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON,D.C. ZOSIIII
January 24, 2008
RE: Advisory Opinion Request by TriState Health Partners, Inc.
~
Dear Ms. Braun:
This is a request for additional information concerning a proposed program by TriState
Health Partners, Inc. (''TriState'') for which you have requested an advisory opinion. According
to your letter, TriState is anon-stock membership organization incorporated in 1995. You
describe TriState as a "non..exclusivc physician-hospital orgaIiization ("PHO',)", consisting of
approximately 200 medical practitioners and one hospital located in Washington County,
Maryland. Class I members include Maryland-licensed physicians (both independently
practicing, and employed, and including oral surgeons), and medical group practices whose
physicians meet that requirement. Washington CoWlty Hospital is TriState's only Class II
member. According to your letter. TriState's proposed program "will iIitegrate its members
clinically'"
You ask for a staffadvisory opinion as to what would be '"the Co.mmission's enforcement
intentions and how would it analyze [TriState's) activities" under Section 5 of the FTC Act if. in
conj1Dlction with the physicians' clinical integration through the proposed program, TriState
"develops contract proposals that include performance bon~ negotiates contract terms
(including price), and enters into contracts with third-party payers for the sale of the integrated
product" as described in your letter. As you .are aware, the staff cannot speak: for the Commission
regarding its la:w enforcement intentions. but can only address how the staff would analyze a
particular arrangement or activity. 'and what recommendations. if any, staffwould be likely to
make to the Commission if the proposed conduct were uridertaken. In order to respond to your
request, it would be helpful if you could provide the following additional'infonilation concemmg
TriState's proposal:
Page 2 of 6
I. Structure and Membership
You state that TriState currently has 64 primary care physicians (''PCPS,,)I and )40
specialty care physicians ("SCPs'') practicing in 29 different medical specialties. Of these 204
total physicians, you note that 35, or about 17 percent of the total, are employed by subsidiaries of
Washington County Health System, Inc. ("WCHSr,), which also is the parent organization of
Washington County Hospital- TriState's hospital member. You note that TriState also bas
cOntracts to provide services to patients under contracts with TriState with an additional 69
physicians in 18 medical specialties who are not members of TriState. Your letter states that
there is no limit on additional.physicians joining TriState, and presumably participating in all of
its programs, including the proposed clinical integration program. It is our understanding from
your letter that all physicians currendy involved with TriState (both members and contracting
pbysicians) will be eligible to participate in the proposed program., although you anticipate that
some contracted physicians may choose not to do so. What is your most recent infonnation or
expectation as to how many of TriState's members and its contracted physicians have elected, or
will elect, to participate in the proposed program, and what is the basis for your estimate?
Other than having to execute the ''TriState Member Participating Provider Contract -.
Clinical Integratwn" (Exhibit 9 of your initial submission), what, ifany, selection or screening
mechanisms or participation requirements will TriState apply initially regarding physicians who
currently are members of, or who contract with, TriState and who seek to participate in the,
proposed program, in order to assure that they have the necessary commitment to work toward
successful achievement of the program's clinical integration goals? What will be the bases or
standards for accepting or excluding at the outset any physicians from participation? What is
TriState's basis for believing that its ph,ysician participation screening standards will assure
participation only by physicians who are committed to~ and likely to help achieve, the clinical
integration goals of TriState's proposed program?
Your letter states that "TriState has no restrictions on the addition of new Class I [i.e.,
pbysician] members." How, if at all, will physicians that ~cquently seek to join TriState's
proposed program be screened for suitability to participate in the program? Will any physicians
be denied participation in the proposed program based on numbers of physicians (either total or
specialty-based) aJready in the proposed program relative to the expected patient enrollment, or
based on other factors, such as the,.ratio of specialists to PCPs? Will there be any restrictions on
when additional physicians may joint TriState and participate in the proposed program? Has
TriState considered whether and how allowing physicians to join TriState at any time may affect
its ability to clinically integrate provision of care by TriState physicians, and the potential of the
proposed program to achieve the anticipated resulting efficiencies in providing care to patients
enrolled in the program?
Whit is the role of the Washington County Hospital, Wasrungton COWlty Hospital
Association, and the Washington County Health System, Inc. (including any of its subsidiaries.
"business units," or ''joint venture affiliates," as identified i.n Exhibit 3 of your initial submission)
in the proposed clinical integration program? What advantages (other than the hospital's $2500
Including general practitioners. family practitioners. pediatricians, and internists.
Page 3 of 6 initial matching payment for each physician who becomes a TriState member) does the involvement of Washington County Hospital or Washington County Health System, Inc. (including any of its subsidiaries) hold for the proposed program? Likewise, what potential disadvantages (e.g., possible pressure'to fill hospital beds, or adopt policies that otherwise potentially involve efficiency/utilization conflicts ofinterest) does the involvement of the hospital and its subsidiaries pose for the proposed program's success, and how will TriState address any such potential disadvantages? II. Integration and Achievement ofEffieiencies In your letter, you state that Tristate contracted on a capitation basis for only one year, and that as of 1998 its operations have been on other than that basis - i.e., not involving financial risk sharing among its physicians. What in TriState's experience supports the expectation that, absent such financial risk-sharing among its physicians, TriState is likely to be able to achieve the necessary high degree of interdependence and cooperation to control costs and ensure quality among its independently practicing physicians in their provision of medical care to patients covered under the proposed program? Does TriState have any experience under its capitation program or otherwise in dealing with physicians who are either nonwCompliant or performing at sub-optimallevels regarding programs or standards under which TriState has operated? Your letter states that member physicians (but not contracting physicians) each pay a '~oining fee" of $2.500 for participation in TriState, which payment to TriState is matched by Washington County Hospital. Is this a new fee for existing TriState physician members to participate in the proposed program, or is it a' pre-existing requirement for membership' in TriState generally, that already has been paid by those physicians who currently are members, and therefore will only apply to new TriState members? lithe latter, will there be any additional fees charged to current TriState member physicians,who already have paid the $2,500 joining fee in order for them to participate in the proposed program? What other financial "investment," if any, will TriState member physicians be required to make in the proposed program (e.g., computer hardware/software, etc.)? Will member physicians participating in the proposed program' be requited to make any non-financial investments in the proposed program (e.g., personal participation in program activities or committees, training of themselves and/or their office staffs, etc.)? Will contracting physicians (ie., those who do not beCome TriState members, but who contract directly with a payer through TriState's messenger arrangement to provide services under future TriState clinical integration program contracts) be required to make investments of any kind in TriState in order to participate in the proposed program? What requirements. if any, regarding IDT capability 8Ild participation will apply to contracting physicians? What will ' evidence or assure contracting physicians' commitment to successful implementation of the proposed 'program? Describe how contractingphysiciarui will participate in all aspects of the proposed program.. including how, operationally~ TriState will assure that the services of contracted physicians are provided in an integrated fashion with those of TriState's member ,physicians. What will be the nature and extent of participation by TriState member and contracting physicians in the Clinical Integration Oversight Committee and its six su~ttees? Exhibit 7
Page 4 of 6
of your initial submission lists members of various committees and subcommittees. However.
tenns of service and future membership rotation do not appear to be addressed. Will TriState
require participation by all or certain TriState member physicians on any committees.
subcommittees, or in other organization activities regarding the perfomlance of physicians other
than themselves (i.e., relating to their interd!'J)endent, as opposed to individual, perfonnance)?
Please explain how Sections_and .ofExhibit 9 of your original submission (''TriState
Member Participating Provider Contract - Clinical Integration") are consistent with TriState's
purportedly operating as a clinically integrated joint venture of its physician members.
Given the current extensive relationship between TriState and InforMed, and the
information and support systems, technology, and ~ther capabilities already available and in use
through that arrangement, what will the proposed program be able to do or achieve that the
current arrangement involving TriState and InforMed cannot, and why? What, exactly, will occm
operationally under the proposed program that is different from, and not currently occurring
under. TriState's current operations?
In. Need for Joint Contracting with Payers, and Collective Determination and
Negotiation of Fees, in Order to Offer the Proposed Program
What aspects of, or programs or activities that will be part of, the proposed clinical
integration program are currently in place or operating with regard to TriState's provision of
services under its existing contracts? Please explain exactly how the proposed program will
differ from existing practices and programs of TriState. How will the proposed program. differ
from the utilization and medical management Services currently provided by TriState through its
.81Tangement with inforMed and its ClIP network?
You state in your letter that '"having the same- network for all integrated product contracts
is important to integrating the quality improvement initiatives and medical management services
into the physicians' practices." How does TriState's proposed program assure that it will have
"the same network for aU integrated product contracts?" Specifica11y~ why isn't TriState's policy
of allowing additional physicians to join TriState at any time and participate in the clinical
integration program - which necessarily will change the composition of the network --
inconsistent with this rationale? Similarly, how is allowing contracted physicians (who represent
about 2S percent (69 of273) of physicians currently participating in TriState's network programs)
to decide whether to participate in the proposed program on a contract-by-contract basis
consistent with the stated necessity of having the same physician network for all contracts in
order to achieve the network's integration and efficiencies?
TriState's proposed program anticipates that non-member (i.e., contracted) physicians will
provide services to patients covered under the program, presumably without substantial loss in the
program's clinical integration and efficiencies. Such contracted physicians, however, will not
participate in TriState's joint negotiation of contracts with purchasers and payers, but rather will
contract individually with those purchasers and payers through a messenger arrangement. If the
contracted physicians can be an integral part of the clinical integration program without joint
contracting, why can't the TriState member physicians do so as well? Similarly, you state that
having the "single integrated network" that will result from joint contracting will enable Tristate
to "reinforce its in-network referral policy, ensuring that patients stay within the TriState network
to the greatest extent possible." How is this justification consistent with using contracted
:physiciansto whom referrals will be made as part of the program. when those physicians
Page 5 of 6 participate on a contract-by-contract basis, and different contracted physicians may be participating in each contract? Ifpatients referred to contracted physicians are part of the integrated provision of care, and this is done without their participating in the joint contracting process, why is it necessary for TriState to jointly contract regarding member physicians? Conversely, if contracted physicians will not be part of the integrated provision of care under the program, why isn't this a significant deficiency in the program's potential for achieving efficiencies, given that contracted physicians represent a significant portion of physicians currently participating in TriState's network programs? In your discussion of the need for joint contracting through TriState. you state (page 29 of your initial submission) that "[a]bsent assurance of participation in TriState's contracts, and thus a sh~ of the revenue generated by those contracts, the physicians would have less incentive to devote substantial time" to the various activities necessary to successfully implement the proposed program. While we understand that physicians may need to recover the opportunity costs of their participation in a program that requires additional time and effort on their part, or desire to make a profit from development of such a program, it is not apparent why that payment or profit needs to come from presumably higher, jointly agreed upon. fee-for-service charge levels by the physicians for their underlying medical services provided under the program. Regarding the discussion in your initial submission -of a future "pay-for-performance" component of TriState's operations, it is our understanding-that your CUIl'ent request for an advisory opinion is not premised on an assertion of financial integration among.TriState's physicians based on this possible future activity. However,. you state that, in order to implement that program, "TriState believes that it will need to coUect a year or more of perfonnance data from its physicians, showing the success of its clinical integration strategy for self-insured employers and smaller payers. Thus, it will need to contract on a fee· for-service basis for some period· before it is able to implement its P4P program... Ris not -clear whether you therefore are separately asserting that such fee-for-service contracting isjustified at this time as-reasonably necessary (i.e., "ancillary',) to implementing a financially integrated, efficiency enhancing, joint venture among TriState physicians in the future. IV. Mark~t Factors What basis does TriState have for believing that payers or other potential customers will be interested in contracting with TriState for the proposed program? Have any payers or other potential customers (e.g., employers) expressed any views regarding the proposed program or TriState's current programs and operation? Regarding the ''non-exclusive'' participation of TriState physicians in the proposed program, you discuss their freedom to contract individually and directly with payers. Is there any restriction or limitation on the ability of TriState physicians to also become members of other physician or provider networks, including other clinically integrated arrangements? Thank you for your consideration of this request for additional infonnation. While we have tried to be complete in our request, it nevertheless is possible that we subsequently may
Page60f 6 require some further information or clarification regarding the proposed program. If you have any questions, please caU me at (202) 326-2744. Very truly, ~David M. N8lTOW
Ober, Kaler. Grimes & Shriver
Attomeys at law
1401 H Street. NW, Suite 500
Washington, DC 20005·3324
202-408·8400 Fax 202·41J8.0640
www.aber.com
VIA COURIER
David M. Narrow, Esq.
Federal Trade Commission
601 New Jersey Avenue, NW
Washington, DC 20001
Phone: (202) 326-2744
Dear David,
July 18, 2008
Christl J. BralRl
cjbraun@ober.oom
202-326-5046
Offices In
Maryland
Washington. D.C.
Virginia
This letter responds to your January 24, 2008 Jetter regarding the advisory opinion
request by TriState Health Partners, Inc. ("THP"). THP's management, committees, and
Board have spent considerable time working through, and addressing, your questions and
concerns, and, as a result, they have made some changes to their proposed program. In
addition to addressing your questions, this letter wil1 explain the changes that have been
made. Many of the answers to your questions come directly from THP and are written
from their perspective. This reply contains 11 sections, but focuses on the following nine
major areas:
• THP contractors and how THP wil1 address their status going forward.
• THP members and how THP will address current and future membership
requirements including securing commitment to clinical integration.
• The roJe of the Washington County Health System, Inc., and its
subsidiaries in clinical integration.
• The relationship between InforMed and THP going forward.
• THP's experience in diabetes management and how this supports the
expectation that THP will be able to achieve the interdependence and
cooperation necessary to obtain the program's intended efficiencies.
• How THP's clinical integration program will be similar to and different
from current THP programs and operations.
• Payer interest in the clinical integration program.
• THP's pay-for-performance plan and it's affect on the FTC's legal
analysis.
• The reasonable necessity of THP' s joint contracting on behalf of its
physician members.
o B E R IfPro1~r!!
David M. Narrow, Esq.
July 18, 2008
Page 2 of38
I. Contractors
The following is expected to address questions raised on pages 3 and 4 of your
letter regarding THP contractors.
Background - When THP was formed in 1994, certain physicians in the
community elected not to join the PHO (Physician-hospital organization) with reasons
including:
• Lack of desire to.pay the membership fee ($2,000 during the 90-day open
enrollment period and $2,500 thereafter, unchanged since inception).
• Desire to remain independent practitioners and a fear of joining any
organization that could restrict their autonomy.
• General reluctance to join any organization that smacked of insurance or
managed care.
• Recognition by a few that the PHO needed their services more than they
needed to join the PHO.
• Service areas predominantly outside of Washington County.
• The PHO's inability to assure a return on investment because the PHO
was formed as a membership, as opposed to stock, corporation.
From about 1997 to date, THP's major client for network and medical
management services has been the Washington County Health System Employee Health
Benefit Plan ("WCHSI Plan" or the "Plan"). The Plan insisted that several of these non-
member physicians or physician groups needed to be included in the THP network in
order for the Plan to have a viable network to care for its enrollees in a cost-effective
manner.
To provide an adequate network for the Plan, THP's response was to create a
"contractor" status within the PHO. These practitioners would have no governance
rights, nor would they share in distributions, if any. But these practitioners did agree to
accept the Plan (InforMed) fee schedule and not balance bill Plan enrollees. This
arrangement has worked very weJI for the past ten years for the Plan and other self-
insured employer groups who have accessed the THP network. The contractor status also
has been used as a convenient designation for non-physician practitioners (e.g., nurse
midwives) who provide care to Plan enrollees but do not qualify for actual THP
membership.
Discussion - THP has come to realize that to develop a clinically integrated
network, continuation of the contractor status within THP is not viable. THP lacks the
ability to secure unfettered commitment to its clinical integration strategy, including the
efficiency-producing initiatives, from these contracted practitioners. Even with a
o B E R f !<~~Cm~~
David M. Narrow, Esq.
July 18,2008
Page 3 of38
requirement that these practitioners sign the "Participating Provider Contract - Clinical
Integration," THP could not guarantee to payers that these practitioners will be
committed to the success and guiding principles of clinical integration. Nor could THP
guarantee that each contracted provider would commit to participation in each payer's
contract; thus, it could not have a single network of committed practitioners, which it
believes is integral tQ the success of its integrative efforts.
THP also recognizes that its network of member physicians is small when
compared to that of CareFirst BlueCross BlueShield or United Healthcare, but
beneficiaries of these plans will have access to the entire plan network, which far exceed
the THP network by sheer numbers and geography. Critical to the success ofTHP's
strategy, however, is access to all payer claims data for these enrollees. As the Electronic
Health Record ("EHR") is populated with claims data from practitioners outside of the
THP membership, THP will be able to examine the care of these enrollees and determine
whether the care is being managed in accord with the principles ofTHP'sclinical
integration strategy. THP, then, will be able to provide plans with the data necessary to
review the patient care being provided by the plan's entire network. Over time, it is
expected that THP will be able to demonstrate to employers, plans, and enrollees the
value of the quality its committed CI network provides over the benefit of the larger size
of the commercial plan networks.
In our letter ofJuly 9, 2007, we reported a total of69 contractors; as of this date,
the number is 70. THP is in the process of eliminating the contractor status by offering
options to these practitioners.
1. With a few exceptions (see 2. foHowing), the contractors have all been
offered a one·time opportunity to join THP as a Class I member. Those
who have either joined, or are in the process of joining as of the date of
this letter, already have met the credentialing standards ofTIIP. As a
condition of their invitation to join, they must agree to meet the standards
for commitment to clinical integration, as outlined later in this letter.
2. The exceptions from an offer to join THP either are not eligible for
membership in THP (15 Licensed Clinical Social Workers) or are .
currently employed by the Class II member and not eligible for
membership (the 4 nurse midwives). The Licensed Clinical Social
Workers will be given the opportunity to direct·contract with Community
Health Partners ("CHP"), the regional network owned by InforMed.
3. The practitioners offered membership in THP who elect not to join THP
and participate in its clinical integration program, will be able to direct-
contract with CHP. As part of the CHP network, they will be part ofa
o BE R f ~o1~JCo~~ David M. Narrow, Esq. July 18, 2008 Page 4 of38 second tier network (higher copay and lower benefits, unless waived due to medical necessity) available to the WCHSI Plan enrollees and the claims data will be added to the enrollees' EHRs. In the event that Plan enrollees see CHP physicians, the THP physicians, through monitoring of their patients' EHRs, should be able to detennine whether or not their patients received guideline-directed care from the CHP physicians and, through follow-up care, make up for any omissions. Although its achieved efficiencies may not reach the level of a closed-panel product, THP intends to do what it can to optimize the quality of care its patients receive, even if those patients self-select and receive some care outside THP's network. II. THP Mem bersbip The following should address your questions on pages 2 and 4 of your letter regarding THP's membership, in particular how THP will address access to membership and commitment to the program by its members. THP has been an "open-PHO" since inception. Generally speaking, any physician who met THP's credentialing standards, which are similar to NCQA's, was able to join the PHO. To date, no physician's membership has been involuntarily tenninated. Moving forward, however, it is THP's intent to be much more selective in allowing new physicians to join. THP is developing a policy intended to ensure that physicians who join THP at the inception of its clinical integration program, and in limited numbers later, are committed to the program objectives of controlling costs and assuring quality care. Many ofTHP's members are practice groups, as opposed to individual practitioners. THP recognizes that, generally, the entire practice is involved in the care of a particular patient.) THP's program will be focused not only at the individual physician level, but also at the practice level. Therefore, the entire practice needs to commit to the clinical integration principles of collaboration, cooperation, and mutual interdependence. In order for a practice's participation agreement to be ratified, each member of the practice must sign an attestation agreeing to committed participation in THP's clinical integration program. The failure of one physician in a practice to either commit to, or adhere to, THP's programs of continuous process improvement will place the entire practice's continued participation in the program at risk. J Group members generally provide call coverage for one another and may see each other's patients when scheduling problems arise. In addition, practice group members often discuss patients' treatment option with each other, particularly in complex cases, and surgeons may even assist one another.
o B E R I!<_~~~
David M. Narrow, Esq.
July 18, 2008
Page 5 of38
In order to assure purchasers of the clinical integration product that THP. can
deliver an entire network of providers absolutely committed to the guiding principles of
improving quality and controlling costs through collective behaviors, THP has
detennined that once THP's current membership has had an opportunity to detennine
whether or not they wish to participate in THP's clinical integration program, the PHO
will be closed to new members with the following exceptions:
1. Current members who decline to participate in THP after the 60-day open
enrollment period for the CI program will have limited opportunities to
participate later. An exception may be made for those physicians who are
in limited-access specialties or serve a geographic region currently not
served. In addition, THP will conduct an annual, 30-day open-enrollment
period for those physician members who declined initial participation in
the program but are reconsidering their original non-participation decision.
All requests for reconsideration win be reviewed by the THP Board of
Directors on a situational dependent, case-by-case basis following an
independent, third-party analysis of need. These physicians would need to
present clear and compelling commitment to nIP's guiding principles of
clinical integration before they can be reinstated as members.
2. Physicians new to the community joining existing member practices, such
as taking the place of retiring or relocating physicians, will be expected to
join TW and agree to participate actively in the group's commitment to
clinical integration. Failure to do so may place an entire practice group's
continued participation at risk.
3. As detennined by the Board of Directors. physicians who wish to join
THP in the future and who either are in a must-have specialty or provide
services in a geographically under-served area may be eligible to join
nIP, as detennined by an independent, third-party needs analysis. Again,
the Board of Directors will make these detenninations on a situational
dependent, case-by-case basis only after the physician has been able to
demonstrate clear and compelling commitment to the program.
THP has not yet distributed the "Participating Provider Contract - Clinical
Integration" ("new contract") to the membership. We await any concerns or changes that
may need to be made to the new contract following review by the FTC. We acknowledge
that once the new contract goes out to the membership, any changes requested by one
physician must be made for all, if approved by the leadership. In an attempt to mitigate
the possibility that the membership may have numerous lawyers reviewing individual
2 New physicians will be expected to meet the THP credentialing requirements.
o B E R Il<Prof1Jtc!! David M. Narrow, Esq. July 18, 2008 Page 6 of38 contracts, THP paid for the services of an independent lawyer to represent the interests of. the physicians in the preparation of this contract. The President of the Medical Staff of WCHA (an independent, private~practicing THP~member physician) selected a lawyer known to most of the membership and who has represented their interests for many years. THP acknowledges that when the contract is released for review and ratification by the membership, individual members will have concerns, especially with the no opt- out provisions. The THP Communications Committee has developed a plan for disseminating the new contract to the membership. The Committee fonned a "Messenger Training School" whereby six physician volunteers have agreed to serve as messengers to communicate the clinical integration strategy, in detail, to their peers in what the Committee has referred to as a "retail sales" strategy. These physician messengers also are prepared to discuss with their peers the elements of the new participation contract and the eventual closing of the PHO to new members. These physician leaders collectively recognize that society's focus is changing from, "how much is paid and who pays" to "what is society getting for our healthcare dollars." They recognize that the traditional independent practice of medicine, in the absence of a platform for putting individual best interests aside for the collective good of the whole, is a failed business model for making significant gains in improving quality and controlling costs. Most importantly, the physician messengers have volunteered to serve in this capacity because of the value they see for the community of physicians coming together under a clinically-integrated model represented by a high degree of cooperation, collaboration and mutual interdependence. These six physicians, plus the more than 40 physicians currently serving on various THP committees, are the early adopters of clinical integration. Although THP has not as yet introduced the new participation contract, it has no reason to believe that more than a few current member practices will decline initial participation. Rather, the general tone among the membership is cautious optimism that the program will be viewed by the FTC as one that, once fully implemented, will achieve demonstrated superior outcomes at demonstrated superior cost savings to their patients and the purchasers of health care. With over 20 percent of the membership already represented on different clinical integration and governance committees and additional physicians serving in an ad hoc capacity as consultants to the development of clinical practice guidelines, THP believes a significant portion of its members will join the clinical integration program. THP has a vested interest in providing a comprehensive network to payers. Network access is a very important component of any managed care strategy. However,
o B E R I!<Pro~Jco~~
David M. Narrow, Esq.
July 18, 2008
Page 7 of38
TRP is not willing to sacrifice quality for quantity-every physician who agrees to
participate in the clinical integration program will acknowledge their commitment to
fully support the tenets of the program by assisting in the development of, and practice to,
the clinical practice guidelines created in collaboration with their peers, utilizing the tools
embedded in the ERR, and showing progress towards continual process improvement
("moving the mean").
The Quality Improvement Committee ("QIC'') is focusing on continuous
improvement and ongoing initiatives that will sustain the long-term commitment to
THP's clinical integration objectives. 3 THP, through the active collaboration of its QIC
and Credentialing Committee, and oversight by the Clinical Integration Oversight
Committee, will use data from the ETG and EBM Connect data sets during the biannual
recredentialing process and at periodic intervals through the year to identifY best practices
and monitor movement of the mean for the individual physician, the individual group
practices, and the entire PRO, and report progress or lack thereof. Continual process
improvement by individual member physicians will result in successful recredentialing
and signify one's continuing commitment to the success of the program. Continued
failure to show improvement will result in peer intervention and could result in eventual
termination from the PRO, if improvement is not seen.
When the leadership decided to embark on a clinical integration initiative, they
made it clear that it was not their desire to cull the outliers. Rather, a guiding principal
has been THP's goal to "move the mean" for the entire network, fully recognizing that
the day may come when it may be necessary to cull the outliers from the network. THP
has the will to cull, but prefers, initially, to work with the entire community of physicians
to give them the tools to move their individual mean. The Symmetry suite of software,
integrated by InforMed and customized by THP, gives THP the ability to tum data into
information; the "heavy lifting" will be the community of physicians coming together
under a clinically integrated program to turn that information into action.
By example, utilizing actual data from the fourth quarter of 2007 for its current
diabetes in more detail in Section VI THP knows
3 NOTE: Since the July 9, 2007 THP request for an advisory opinion Jetter, the Service Improvement
Committee, charged with monitoring the compliance to clinical practice guidelines, has been collapsed into
the Qle. The physicians, after meeting several times, believe that the clinical integration objectives are
better served by having the same committee that develops the guidelines also monitor those guidelines.
o B, E R I!<~co~at~ David M. Narrow, Esq. July 18, 2008 Page 8 of38 The QIC will use data as achon mem at large, and the findings will be incorporated into the evaluation process. Specifically: 1. What can the selected PCP learn from the rest of the membership in order to favorably decrease hislher patient hemoglobin Al C scores? 2. What can the membership learn from the selected PCP to increase their annual screening rate for diabetic retinopathy? 3. Using the fourth quarter 2007 as a baseline, how will the membership show improvement over time by moving the mean from_overall compliance to incrementally increasing goals and established "stretch targets"? III. Other Specific Responses Relating to Members and Membership Following are other specific questions regarding membership concerns that 'the FTC raised and our responses. 1. Membership Update Attached as Exhibit A is an updated membership chart, which shows the current number ofTHP member physicians and practice groups in each medical specialty. At this time, THP has a total of212 physician members, 41 of which are employees of WCHSI or one of its subsidiaries. 2. Does TriState have any experience under its capitation program or otherwise in dealing with physicians who are either non·compliant or performing at sub-optimal levels regarding programs or standards under which TriState has operated? TriState is in the very early stages of development of clinical practice guidelines. To date, 18 have been approved by the Board of Directors although 30 are in various stages of development and review. None of the guidelines have been disseminated to the membership as of yet, as THP also is in the very early stages of determining which metrics initially will be measured, how they will be measured, and how this will be communicated to the membership. THP does have several examples of successfully ......,'.... ,'6
o B E R I!.<~l-c!.~ David M. Narrow, Esq. July 18,2008 Page 9 of38 The second example applies to THP's diabetes disease malIlajgerneIlt 1>lrOwram the WCHSI Plan 3. Is this ($2,500 "joining fee") a new fee for existing TriState physician members to participate in the proposed program, or is it a pre-existing requirement for membership in TriState generally, that already has been paid by those physicians who currently are members, and therefore will only apply to new TriState members? . The "joining," or membership, fee as established in 1994 was, and continues to be, a one-time fee of $2,500. THP gave a $500 discount to those physicians who joined in the first 90 days. The membership fee has remained $2,500 since the close of the first 90-day open membership period and has been paid by all new members since then. Changes to the membership fee are at Board discretion, but no changes are anticipated. All future, new members will be required to pay the membership fee. 4. If the latter, will there be any additional fees charged to current TriState member physicians who already have paid the $2,500 joining fee in order for them to participate in the proposed program? At this time, no additional fees are expected to be required of the membership. Capital contributions and retained earnings from network access, medical management, and health risk assessment fees charged to self-insured employer groups have been adequate to fund THP operations to this point. THP plans to continue funding its operation from payer network access and medical management fees. In the event that
o B E R I~~J~~ David M. Narrow, Esq. July 18, 2008 Page 10 of38 THP's operation costs and the costs of the EHR exceed THP's income, the THP Board does have the ability to assess THP's members. 5. What other financial "investment," if any, will TriState member physicians be required to make in the proposed program (e.g., computer hardware/software, etc.)? One hundred percent of THP member offices currently have computers and internet access, which are requirements of all members for participation in the clinical integration program. The estimated annual cost to a physician office for high speed internet access is $600, with an annual modem fee of $60. Because 69.8 percent of THP practices are already using the THPlInforMed online system for administrative functions (e.g., referrals and claims submissions) related to Plan enrollees, many offices may not require additional hardware. Physician offices generally embrace this technology and have made the necessary purchases that help to increase office efficiency. The remaining offices that are not currently accessing the online system will likely need to add additional computers and printers. THP estimates that cost to be approximately $2600. THP anticipates that each physician will be required to attend four hours of training. After checking with several offices (both primary care and specialists), THP estimates the potential lost income of this attendance is approximately_per physician. Office staff will receive the same four-hour training as physicians, with the addition of customization of the EHR for the practice. The cost to the practice for training of the office manager would be approximately_for wages, and the cost to the practice for each nurse's training would be approximately. For the average two-physician practice, a four-hour training session will cost the practice approximately $2500. The rate limiting factor for the success of the EHR is having enough covered lives in the data warehouse to make the office effort worthwhile. THP is unsure what the critical mass requirement is, but does realize that the current number of covered lives (less than 6,000) is not sufficient. Anecdotally, THP has heard that physicians will use the EHR in one or more of the following four ways: a. Several physicians have reported that they want the capability to have the applications available to them when the patient is sitting in front of them, and they wish to be able to log-in and pull up the chart. Those physicians may need to purchase additional hardware and internet access capability (hardwire, wireless, etc.) in order to use the EHR in this fashion.
o B E R I~DCJC!l David M. Narrow. Esq. July 18, 2008 Page 11 of38 b. For most practices, it is expected that the receptionist will print the EHR for each scheduled patient and place it on top of the patient chart for the physician to review during the patient visit. This also may require additiOIial hardware, such as a dedicated computer and printer. c. In order to move the mean, physicians have identified opportunities to use the EHR to reach out to non-compliant patients and schedule them for appointments. Again, this may require additional time investment by the physician and office staff to identify non-compliant patients and contact those patients. d. At the request of the physician, THP's nurse case managers will review the EHR and forward to the physician areas of non- compliance or concern. Physicians will then have an additional time investment in determining how to become compliant, or, if the non-compliance is due to patient non-compliance, how to assist the patient. It is noteworthy to mention that three physician directors attended the full-day seminar at the Federal Trade Commission on May 29, 2008 and that four physician directors and one physidan cominittee member attended a full-day seminar in Chicago on June 25, 2008. A full-day out of the office for these eight physicians, plus a half-day out for travel to Chicago for the five, represent a considerable loss of income for these practitioners, but speaks volumes about their commitment to the success of the program and their willingness to convey lessons learned to their peers. 6. Will member physicians participating in the proposed program be required to make any non-financial investments in the proposed program (e.g., personal participation in program activities or committees, training of themselves and/or their office staffs, etc.)? As stated earlier, over 40 physicians currently are participating in formal committees and governance. Many more physicians, although not formal committee members, have served on an ad hoc basis, assisting in the review of clinical practice guidelines that impact their specialty. It is expected that virtually the entire membership, at one time or another, will participate in the development of some component of the program. This not only is an expectation of continued membership in THP,4 but also an affirmation of commitment to clinical integration. 4 See _of the newly revised Participating Provider Contract, which is Exhibit B to this letter.
o BE R f l<Pm1~~CQL~
David M. Narrow, Esq.
July 18, 2008
Page 12 of38
Every physician and their immediate support staff will be required to attend
training sessions on the use of the EHR, as noted above. Office staffs generally are
very familiar and comfortable already with the basics of the software, as they use the
software for InforMed referral management, claims submission, and enrollment
verification. We anticipate that the office staffwill adopt the EHR quickly, due to their
current familiarity with the basic system, and can be expected to be an excellent front-
line resource for keeping the physicians informed.
7. What will be the nature and extent of participation by TriState
member and contracting physicians in the Clinical Integration Oversight
Committee and its six sub-committees?
The Clinical Integration Oversight Committee ("CIOC") is composed of the
chairs of the five sub-committees-Quality AssurancelUtilization Management
("QAlUM"), Credentialing, QIC, Pharmacy Benefits Management, and Care
Coordination. The CIOC Chair is a physician Board member.
As of this writing, 35 physician members fill 51 physician governance positions.
This excludes the medical director, who serves on 7 governance committees, attends the
Board of Directors meetings, and also is a Class I member of THP. The physicians who
serve in multiple roles, for the most part, are Board members who serve on committees,
and committee chairs, who also serve on the CIOC.
The current Class I physician participation in each committee, including the
medical director, is as follows:
Board of Directors - 9
Clinical Integration Oversight - 6
Quality AssurancelUtilization Management-5
Credentialing - 5
Quality Improvement - 11
Pharmacy Benefits Management - 4
Care Coordination - 1
Communications - 4
Bylaws-4
Nominating - 5
Contracting Finance Administration - 6
To date, very few physicians have said "no" to a request to join a THP CIOC
sub-committee or any of the other standing committees (Communications, Bylaws,
Nominating, and Contracting Finance Administration) and those that have had very
good reasons. All committees currently have asufficient number of volunteers serving.
o B E R I~o~l-ca.~a1~ David M. Narrow, Esq. July 18, 2008 Page 13 of38 It is anticipated that the QAlUM Committee will add 4 additional physicians in 2009, while the QIC will add an additional 5 physicians as the committee begins to focus on quality metrics. THP anticipates no problems in filling vacancies as physicians determine that it is time for them to rotate off of a committee. THP currently has no plans to impose term limits. As long as the leadership determines that a volunteer committee member continues to contribute in a positive manner and attend meetings, there would be no compelling reason to arbitrarily tell that physician that hislher services are no longer needed. While all of the standing committees have many new members, the two oldest committees- Quality Assurance / Utilization Management and Credentialing-have members who have served since inception (1995). These physicians have been critical to the development of the clinical integration program, have a vast amount of institutional history and perspective, and are looked at as'leaders of the program; Again, THP has no plans or desire to arbitrarily rotate them off of these key leadership positions. THP has, however, included a requirement in its participation contract that each member physician commit to serving on a CIOC sub-committee if and when called upon. S 8. Will TriState require participation by all or certain TriState member pbysicians on any committees, subcommittees, or in otber organization activities regarding tbe performance of physicians other than themselves (i.e., relating to their interdependent, as opposed to individual, performance)? The QIC is committed to the process of utilizing data to review the activities of their peers in order to achieve continual process improvement and "move the mean." This includes the development of reporting mechanisms and actual presentations to the physicians, which will show where each physician meets standards or needs improvement. The committee is prepared to reach out to other physicians for assistance in this process, and the membership will know that their participation is a requirement of the program. Physicians, perhaps more than most other professionals, are hesitant to sit in judgment of their peers lest those same physicians sit in judgment of them. In addition, physicians rely upon other physicians for referrals; any actions taken by one physician, such as advising another that hislher practice patterns are not up to the community standard, needs to be done very carefully. The leadership fully recognizes, though, that the way things have been done in the past is not sustainable for the future. s See •••••of the Participating Provider Contract, attached as Exhibit B.
o B E R I!<~~J~~
David M. Narrow, Esq.
July 18, 2008
Page 14 of38
Continual process improvement and resultant population health improvement
will not occur without the courage to confront performance issues. The entire
membership will be required to participate in these activities when caned upon. This is
an expectation of continued membership in THP and participation in the program and is
embedded in the new contract. The QIC will be developing improvement goals, issuing
"report cards" to the member physicians with recommendations for improvement, and
working with those physician groups needing improvement.
Specifically, all physician members ofTHP will be expected to participate when
called upon, and when appropriate, in quality improvement activities to include, but not
be limited to:
a. Challenging peers to improve.
b. Sharing "best practice" ideas and methods with competitors in a
manner that will help all Jearn and improve.
c. Mentoring practices that demonstrate difficulty in achieving
quality improvement.
d. Reviewing patient files of lower performing physicians and
making recommendations for improvement.
e. Leading training sessions in specialty-specific clinical practice
guidelines and assisting colleagues in implementing those
guidelines.
9. Please explain how Sections of Exhibit 9 of your
original submission ("TriState Member Participating Provider Contract - Clinical
Integration") are consistent with TriState's purportedly operating as a clinically
integrated joint venture of its physician members.
Section_of the original contract states, "Provider agrees and acknowledges
that he or she remains solely responsible for all clinical judgments he or she makes with
respect to his or her patients." Section. states, "For the purpose of this Contract and
all services to be provided hereunder, each party is, and will be deemed to be, an
independent contractor, and, except as provided in_of this Contract, not an agent
or employee of the other party and neither may hold itself out as an agent or employee
of the other party." The FTC staff should note that these provisions are standard
contract provisions. There are two main reasons that these provisions are included in
the contract, neither of which affects THP's integration.
o B E R IfPro~.1 Co~a!~ David M. Narrow, Esq. July 18,2008 Page 15 of38 First, these provisions are intended to preclude THP from liability in a provider's medical malpractice case. Even though THP's physicians will be guided in their practice by THP's guidelines, only the physicians will know whether following a guideline is the appropriate treatment for their patients. For example, a THP guideline may call for the prescription of aspirin to heart patients. Only the physician will know, though, whether a patient has an aspirin allergy that would contraindicate prescribing aspirin. Thus, the physicians must be responsible for assessing the patients and, ultimately, making treatment decisions. Second, the Maryland Board of Physicians, the Maryland physician licensing body, has taken the position that a corporation may not employ a physician unless it is: 1) a professional service corporation; 2) a hospital; or 3) a health maintenance· organization. Therefore, THP cannot legally control its members' clinical decision- making, nor can the physician members be anything other than independent contractors ofTHP. Even if these .legal justifications were not present, the contract provisions would still not be inconsistent with THP's operation as a clinically integrated joint venture. Clinical integration is a partial integration of providers who combine some, but not all, of their business activities through the joint venture. If the physicians were employees of THPor THP otherwise controlled their practices, THP would be a fully integrated entity and there would be no question as to. whether there was sufficient integration for THP to contract with payers on their collective behalf. 10. Regarding the "non-exclusive" participation of TriState physicians in the proposed program, you discuss their freedom to contract individually and directly with payers. Is there any restriction or limitation on the ability of TriState physicians to also become members of other physician or provider networks, including other clinically integrated arrangements? THP does not restrict its members' ability to join another physician or provider network. The only restriction regarding other networks is that a Class I THP Board member may not serve on the Board of Directors of another provider arrangement. As for joining a clinically integrated network, THP is not aware of any other initiatives in this area to form a clinically integrated network. THP is following the activities of other provider organizations in our market area, however. Should such an initiative arise, THP will evaluate, at that time, whether or not imposing such restrictions are both viable and legal. Our concern is that if the quality improvement initiatives of another such arrangement are significantly different than those ofTHP, THP's program could be jeopardized. Again, counsel will be consulted before decisions are made regarding permitting participation in such arrangements.
o B E R I~~l-Cott~
David M. Narrow, Esq.
July 18, 2008
Page 16 of38
IV. Role of Washington County Hospital Association and the Health
System
This section will discuss the advantages and disadvantages to THP of having the
Washington County Hospital Association ("WCHA") and its ancillary business entities
as partners in the clinical integration strategy. It also will discuss the advantages and
disadvantages to the Hospital and its ancillaries of participating in the program. Suffice
to say however, the hospital leadership is 100 percent committed to the success of the
partnership and, to date, has taken absolutely no actions that could be interpreted as
anything less than full support. As will be evident from the discussion, WCHSI is more
than a contracting payer for the program, and WCHA is more than a member ofTHP,
an investor, a partnering provider, and a competitor.
Advantages to THP
1. The Washington County Health System, with about 2,970 employees in
total, is the largest employer in Washington County (according to the
2008 Business & Ind~irectory of Washington County). As such,
the health system has _ total covered lives in its employee health
benefit plan. There are two major advantages to THP with these
numbers:
a. The EHR development, monitoring of baseline compliance to
evidence-based medicine and clinical-practice guidelines, and the
evaluation of preliminary practice efficiency indexes would not
have been possible without an initial large volume of covered
lives popUlating the data warehouse. The WCHSI Plan has
provided sufficient covered lives to get the clinical integration
program started. With these _ covered lives, we are able to
demonstrate to payers, purchasers, and the physician membership
the "art of the possible." For many, seeing the technology fulfill
its potential has truly been an enlightening moment.
b. The access, medical management, and disease-risk assessment
fees paid for care rendered to THP's current self-insured
enrollees, including the WCHSI Plan, have allowed THP to fund
its day-to-day operations to a level sufficient to build the internal
infrastructure to support the program. Future initiatives, such as
a community-wide electronic medical record or development of a
local health information exchange organization, may require
capital beyond the capabilities of either partner. There are
significant advantages to having the hospital as a partner when
THP will face increased capital requirements to fund the next
generation of quality improvement initiatives. Funds will also
come from payers supporting THP programs that produce better
outcomes for their members, a direct result of physicians
o B E R I~rof~~cl~
David M. Narrow, Esq.
July 18, 2008
Page 17 of38
providing clinically integrated services to those payers. While
THP non-clinically integrated programs currently are focused on
the self-insured market, it is anticipated that the long-term value
to the community will be with the fully-insured market where
aggressive care management and clinically-integrated programs
are essential to population health improvement, increased quality,
lower costs, and decreased financial exposure to the health plans.
2. The 50 percent capital contribution by the hospital is not insignificant.
Again, when matched to that of the physician contribution, these funds
have provided sufficient funding to date for infrastructure development
to support the program.
3. The power of the EHR over other such advancements in technology is the
marriage of medical claims data with lab values and pharmacy data. This
marriage would not have been so easily, or possibly, achievable if outside
reference labs or non-aligned retail pharmacies were used. As an owner
of the major reference lab in the county, Hagerstown Medical Lab
("HML") and with about _pharmacy market share through its
owned pharmacies (Home Care Pharmacy), synergies have been created
that significantly enhance the value of the program technology to the end
user. For example, WCHA bills generic revenue codes for lab testing
performed for emergency room and inpatient patients, so plain claims data
would not supply useful data for the EHR on the tests performed. Because
HML is integrated with WCHA, HML is able to transmit to THP for
inclusion in the ERR lab values for WCHA patients. Inclusion of the lab
values in the ERR should prevent duplication of tests and allow for better
tracking of health changes post-discharge, reducing readmissions.
4. Several of the hospital-employed, hospital-based andjoint-venture-
aligned physicians serve in prominent leadership and support roles in the
development of the program. The expertise, counsel, and advice these
consultants bring to THP may not have been present were they not
aligned with the PHO through the health system's involvement and
commitment to the program.
5. Several key hospital and Antietam Health Services directors and
managers serve on THP committees. From the hospital, this includes the
vice president of medical affairs, the vice president of finance, director
of public relations, director of health management, director of behavioral
health, both the director and manager of integrated patient support
services, and the manager of total rehab care. From Antietam, this
includes the vice president of operations, executive of operations,
pharmacy benefits coordinator, and four of the clinical pharmacists.
Without the "H" partner in the PHO, the expertise of these personnel
would not be realized.
o B E R I~'O~i>~C.t~ David M. Narrow, Esq. July 18, 2008 Page 18 of38 6. As a major employer, the hospital, its executive leadership, and its board of directors have a significant presence in the business community. These hospital representatives are key to assisting THP in communicating its message to other purchasers of health care in the community; An example is coordination of introductions to community groups where THP can present its strategy for population health improvement. 7. The hospital provides formal forums for presentation of the program to key constituents. This includes the quarterly meeting of the medical staff, medical staff departmental meetings, and various boards. 8. The TI-IP member physicians, as partners with the hospital in the clinical integration program, will have better alignment with the hospital, as both parties focus on outcomes and the care of the patient through the treatment continuum. Payers will place high value on the presence of a vertically integrated program in the market place because of the potential cost savings through the management of patients' care. 9. According to speaker Toby G. Singer, Esq., at the FTC Clinical Integration Workshop of May 29, 2008, clinically-integrated provider programs aligned with a hospital partner, such as PHO's, generally are more successful due to the hospital's access to capital, information technology expertise, funding capabilities, and awareness of Stark and regulatory restrictions. Disadvantages to THP 1. A major disadvantage of having the hospital as a partner is the issue of patient steerage to the hospital and its rate regulated environment, as both inpatient and outpatient rates are non-negotiable in Maryland when provided in the hospital setting. Payer fiscal interests are best met when as much care as possible can be delivered outside of the hospital because those rates of reimbursement are negotiable. As such, payer and THP incentives are potentially opposed to those of the hospital. THP has long recognized that when services are provided within the hospital's own walls for services the hospital also pays for as a self- insured employer, it is in the hospital's best interests to steer that business within. These transactions impact the hospital income and expense statements, but not the balance sheet. However, physicians are making care decisions based on what is most appropriate and cost effective for an individual patient's circumstance. To date, however, the issue of steerage to the rate-regulated environment has not been an issue when it is not in the best fiscal interests of the non-
o B E R I!<Prot!}.c!l David M. Narrow, Esq. July 18, 2008 Page 19 of38 WCHSI, self-insured health plans managed by THP. For these plans, THP steers to the unregulated environment, unless there is a compelling clinical reason for utilizing the regulated environment. The hospital fully supports these THP steerage decisions, which are made in the best fiscal and clinical interests of the clients. 2. Angst has been expressed periodically-that the hospital could exert influence in ways that are detrimental either to THP or to the independent physicians. While this has not occurred to date, it almost is a natural tension point that always will exist between independent physicians and any hospital. At the Board of Directors level, the Class I members (physicians) have one vote and the Class II (hospital) has one. There must be unanimity for a resolution to pass. To date, this has been an effective mechanism for dealing with fears of an imbalance of power at the highest level of PHO leadership. 3. The hospital is viewed by many private physicians as a competitor. As in other areas throughout the country, physicians in Washington County have been expanding their outpatient services and seeking new business and investment opportunities. While the hospital has successfully joint ventured with many of these physicians and clearly wishes to continue these business arrangements, not all physicians want the hospital as a joint-venture partner. This tension is most clearly obvious when the hospital insists that the care for which it pays for WCHSI Plan enrollees is delivered within the WCHSI system. Several physicians have used WCHSI's steerage of Plan enrollees as a reason for not wishing to further partner with the hospital. Generally speaking, however, once physicians understand the economics from the hospital's perspective, tension dissolves. Advantages to Hospital 1. Population health improvement, continuous quality improvement. and controlling the escalating costs of healthcare support the mission of the hospital and health system. Through its alignment with THP, the health system has been able to keep its increase in medical and pharmacy claims to_for the past fiscal year o~us fiscal year. For the current fiscal year-to-date, the trend is~ Anecdotally, we hear of increases year-over-year of 15 percent to 35 percent for local fully- insured employer groups. One of the hospital's agenda items is to ensure that local employer groups-whether fully- or self-insured-have access to the successes the hospital has enjoyed as a result of its relationship with THP. 2. As mentioned previously, there exists at all times a state of tension between a hospital and its medical staff. Unless the two parties are joint-
o B E R I~Prof~i1!m~ David M. Narrow, Esq. July 18, 2008 Page 20 of38 venture partners, it is very difficult to align incentives. The PHO, however, is a powerful joint venture and medical staff integration strategy. As bpth sides continue to work to develop the program, and recognize the value the other brings to the process, relationships can only be strengthened. This serves as a compelling incentive for the hospital to participate in the program. 3. THP, through its active governance and committee structure, is serving as an excellent vehicle for developing physician leaders for the future. As these physician leaders learn to work more closely with the hospital leadership on THP's clinical integration program, they will gain the skills to work more closely with the hospital in medical staff leadership positions. From the hospital's perspective, THP membership is a good investment in its own future physician leadership development and integration strategies. 4. Under the Maryland's hospital rate-regulated-reimbursement system, hospitals have an incentive to receive the incremental admission. The hospital fully recognizes that between managed care payers and THP, forces external to them will work to keep patients out of the hospital. But when that patient does require acute hospital care, WCHA wants to ensure that the incremental admission is coming to it. If WCHA is closely aligned with THP and its clinical integration program, the sense is that the physicians will want to admit to a hospital that adheres to its program protocols. 5. Hospitals in Maryland, under the regulated reimbursement system, have a financial incentive to reduce length of stay. The more that care is managed by THP and its physician partners, the more the hospital can trust that its joint-venture partners are protecting its interests in controlling length of stay. Disadvantages t~ Hospital There are few disadvantages of THP membership to the hospital that have not been addressed in one way or another previously. The hospital can be expected to see its admissions decrease, but this is happening regardless. The hospital will continue to lose outpatient business to the physicians, but this is happening regardless. And the hospital will need to continue to match the physicians with capital infusion but again, this is an investment that the hospital believes to be worthwhi1e. A venue for the hospital to create business partnerships with key physicians and to focus physicians on hospital goals (such as reduced length of stay) is an advantage that outweighs any significant disadvantages of the partnership. The hospital recognizes that physicians drive clinical outcomes and desires to support the physicians in the process.
o BE R I!<~..1cl~ David M. Narrow, Esq. July 18, 2008 Page 21 of38 V. InforMed Relationship The I.nforMed suite of teclmology tools serves as the platform. that supports the entire clinical integration program. Specifically, the EHR is the vehicle which facilitates the interaction among disparate groups of physicians that will occur when all can view, at their individual desktops, the entire continuum of care including office, hospital inpatient and outpatient, tertiary facility, in~network, out-of~network, and ancillary services including pharmacy and lab values, home care, and durable medical equipment. The suite of software also provides the evidence-based medicine guidelines, reporting of compliance to those guidelines, predictive modeling, and efficiency index comparisons for the individual physicians to local, regional, and national databases. As critical as the EHR is to THP's clinical integration program, its effectiveness is severely limited by a lack of critical mass of data flowing through the data warehouse. Currently, the EHR is populated only by those claims for which inforMed is the TPA. In an absolutely ideal world, every citizen in our community would have an individual EHR available at the desktop of every physician and caregiverin the community. Because populating the EHR requires claims flowing through the InforMed data warehouse, this would require that every claim produced by every provider find its way to InforMed, which is unlikely to happen in the near future. Although the EHR will be of optimal value if it contains all information for all patients, it is not valueless if it only contains information for all patients covered by clinical integration contracts. THP's physicians will need some means of seeing for those patients whether the guideline-directed care has been delivered. THP intends to populate the InforMed data warehouse with claims data from the plans with which it contracts. THP will negotiate with payers interested in purchasing THP's program to ensure the payers furnish the data that populates the inforMed data warehouse. THP is aware that CareFirst BlueCross BlueShield currently makes claims data available to InforMed for other client arrangements. If payers are unable to furnish the data, THP's fall-back position is to obtain the claims data from its members. THP's member participation contract requires all THP members to submit duplicate claims to InforMed upon request. Because of the challenges of collecting claims data from hundreds of physicians, as opposed to the handful of payers, data collection from the members is likely to be a short-term requirement of program participation. THP's current clients, including the WCHSI Plan, chiefly relate to inforMed for TP A services-claims adjUdication and payment, membership enrollment, stop loss insurance placement, etc. THP's relationship with InforMed, however, is more as the technology support company. The obvious strength of this relationship is the availability of the ERR, in addition to the medical management suite of software
o B E R I~o~£c!l David M. Narrow, Esq. July 18, 2008 Page 22 of38 (MMOTS - Medical Management Outcomes Tracking Software). 6 The real value InforMed provides THP is its data warehouse capabilities. . Once THP begins to sell its program, it anticipates that InforMed will continue to serve existing self-insured clients in our market as the TPA. InforMed may even develop additional TP A business as a result of its relationship with THP. In fact, THP would prefer that future self-insured clients choose InforMed as their TPA because of the excellent working relationship developed over the years between the two parties. THP, however, does not need InforMed as the TPA for any of its future clients who purchase its programs, including self-insured clients. When THP's plan to sell its programs to the major payers comes to fruition, it is not expected that InforMed will be involved in any role other than THP's data warehouse, software development, and technology vendor. What InforMed cannot bring to THP are fully-insured, major purchasers. In addition, due to its lack of physical presence in the community, InforMed has been relatively unsuccessful at bringing self-insured clients to THP. Since our letter of July 9, JH"l.U"i~"'l of business developrneIilt. Again, serves as the A to these new the only expectation of InforMed is that it will continue to serve as THP's data warehouse, software development, and technology vendor. VI. Diabetes Management Program On February 1, 2005, THP implemented a three-year diabetes management program (the "Program") on behalf of the WCHSI Plan. The Program was intended to demonstrate that intensive care management of a population, combined with a network of cooperating and collaborating physicians, could have a positive impact on the health of these Plan members. THP's Quality AssurancelUtilization Management Committee developed, and had continual oversight over, the program. THP was confident of its ability to manage this program and put $81,577 at risk. If there were Plan savings, THP would receive 50 percent of those savings up to $81,577 (the "stop loss" point), but if there were no savings, THP would reimburse the Plan 50 percent of the downside up to the stop loss point. Due to the successful results of the program, the THP's share of the savings was $79,949. 6 Of note is InforMed developed the EHR with the active support and involvement of the THP QAlUM Committee and management.
o B E R If~.l-C!!
David M. Narrow, Esq.
July 18, 2008
Page 23 of38
A. Program Design
The Plan agreed to the following THP recommendations for the Program:
1.
2.
3.
4.
5.
6.
The period 2/1/2004 to 1131/2005 served as the baseline year. The costs of
managing this population were calculated along with baseline clinical and utilization
metrics. The Plan agreed that the annual costs during the Program would be adjusted
each year for comparison to the base year to account for:
1. Cost increases due to inpatient care rate increases granted by the Maryland
Health Service Cost Review Commission ("HSCRC").
2. Expected increased costs due to the natural progression ofthe disease,
determined by the ADA to be five percent per year.
3. Cost increases due to the addition of a bariatric surgery benefit, a benefit
not available to Plan members during the base year. .
B. Physician Involvement
THP's physicians' engagement and cooperation were critical to the success of the
program. Specific physician engagement in the program included:
1. The QAlUM Committee developed the program and monitored the
program to ensure success.
2. THP's Medical Director held meetings at which the member physicians
engaged in a dialogue with THP's staff about the best means by which the
staff could support the physicians in implementation of the program.
o B E R I~~11rll David M. Narrow, Esq. July 18, 2008 Page 24 of38 3. THP physician members worked closely with THP's Disease Managers to ensure patients received proper medications, appropriate testing was ordered in accordance with the time guidelines, patient were properly encouraged to comply with treatment regimens. 4. Disease Managers encouraged patients to discuss and address health issues with their primary care physicians and would let physicians know about patient issues, facilitating timelier and better focused treatment. 1. 2. 3. 4. 1. 2. 3. 4. 5. C. Population Clinical Results D. Population Utilization Results a. THP and its physicians successfully directed the right care to the right setting at the right time.
o B E R I~~i1J;! David M. Narrow, Esq. July 18, 2008 Page 25 of38 b. THP and its physicians decreased the Program population's use of high-cost acute-care settings, including the emergency room. c. Patients who were admitted to the hospital required more intensive resources, as evidenced by a.percent increase in the per diem costs over the Program (an amount not entirely attributable to HSCRC rate increases). d. Patients who were admitted to the hospital, despite being more complex than admittees in the baseline year (as evidenced by the per diem increases). had shorter lengths of stay. e. Physician-patient bonding was enhanced for both established and new patients; patients not being seen enough were being seen more often, and diabetic patients previously not obtaining preventive care were successfully directed to physicians' offices. E. Population Financial Results 1. Overall, the Plan experienced a $159,898 reduction in total costs for this population during the 3-year period. Thus, THP physician performance was rewarded with 50 percent of these savings, or $79,949. 2. The Plan experienced a .percent increase in medical management costs, paid to THP for managing this population. The medical management return on investment (ROJ) was conservatively calculated at ... somewhat better than commercially available disease management programs. F. Conclusions THP and its member physicians are extraordinarily proud and pleased with the results of the Program. Physician participation in this demonstration project was voluntary. All physicians and practice groups with diabetic Plan enrollees cooperated in the program, with the exception of one primary care practice that did not initially commit to the Program but later agreed to participate. Clearly, physician engagement and cooperation, with excellent support from THP staff, resulted in a successful program. Highly personalized disease case management, coupled with a motivated community of physicians, resulted in a positive impact on a small (190) patient population with a disease particularly challenging to manage.
.' o B E R I!<~r!.~ David M. Narrow, Esq. July 18, 2008 Page 26 of38 Utilizing lessons learned from the Program and the technology tools provided by InforMed, THP and its member physicians are optimistic that the lessons from this experience can be extrapolated to the clinical integration program-a larger-scale quality- and cost-improvement effort that will cover mUltiple diseases for a significantly larger patient population and require active cooperation and engagement by all members of THP. A positive advisory opinion from the FTC will permit THP and its physicians to begin discussions with the other health plans in the THP market area, allowing THP to reach other community members who can benefit from THP's emerging clinical integration strategy and its medical management programs. VII. Differences and Similarities Between Current and Future Operations The following answers respond to questions raised on page 4 of your letter. What aspects of, or programs or activities tbat will be part of, the proposed clinical integration program are currently in place or operating with regard to TriState's provision of services under its existing contracts? With regard to services provided currently to payers under THP's existing contracts, THP will continue to offer: 1. Delegated credentialing. THP's credentialing program exceeds the standards set by NCQA. 2. Utilization, disease, case, and pharmacy management. The fun medical management services that THP currently sells health benefit plans will still be available for purchase. THP will, however, incorporate certain aspects of these services into its clinical integration program, as explained more fully below. 3. Online referral management. The referral management program on the THP/lnforMed web site is currently only used for InforMed-contracted plans. Following implementation of the clinical integration program, THP providers will use the software to initiate all referrals for THP-contracted plan enrollees. 4. Utilization of the Symmetry software suite on the InforMed site. The ETG, ERG, and EBM Connect software are currently used by THP staff to provide information to contracted payers. This will continue. Currently, THP committees make limited use of the software, but that will change under c1inical integration. Few THP member physicians even know about
o B E R llio~c!.~
David M. Narrow, Esq.
Ju1y 18, 2008
Page 27 of38
this software right now, but that will soon change as is explained more
fully below.
5. Health Risk Assessments ("HRA") - THP utilizes a commercially
available disease risk assessment tool from BioSignia (Know Your
Number) that serves as not only a robust predictor of risk for t~n major
diseases but also as -a powerful tool to reflect the percentage of that risk
that is patient-modifiable through targeted lifestyle changes.
Current interactions between THP and its member physician offices are currently
confined to limited activities, all of which will continue under the proposed clinical
integration program. These activities include:
1. Credentialing and recredentialing, including site surveys. This comprises
close to 80% of the current interaction between THP and its member
offices.
2. Administrative assistance solving providers' problems with InforMed and
THP clients.
3. Training assistance to the office staff on the referral management and
eligibility verification components of the InforMed software.
4. Issuing passwords to the InforMed site for new employees and "resetting"
passwords when required.
5. Nurse case managers interact with office staff and member physicians on a
situational dependent, case-by-case basis. including support to the WCHSI
Plan diabetes disease management program described above.
6. Provision of "value add" services to the membership; such as group
purchasing of supplies and group discounts from a collection agency.
Please explain exactly how the proposed program will differ from existing
practices and programs of TriState.
The proposed clinical integration program will see significantly increased
interaction between THP member physicians and between THP and its member physician
offices. These activities will include:
1. Utilization of the EHR - All physicians will be expected to access and
utilize the EHR as the main tool for ensuring a high degree of cooperation,
collaboration, and mutual interdependence, which are lacking under the
current model. THP will be monitoring closely the "hits" to the EHR from
its members to ensure the expected utilization and will work with those
o B E R IfPrm~JCo~ David M. Narrow, Esq. July 18, 2008 Page 28 of38 that may be less than compliant in utilization. THP's physician leadership expects that significant utilization of the tool will result in such improvements as virtual elimination of duplicate and/or unnecessary diagnostic tests, increased compliance with prescription drug utilization, increased communication between physicians on coordinated-care plans, increased evidence-based-medicine compliance, and improved patient education. All plans with which THP contracts will be expected to furnish data to the THP/InforMed data warehouse to populate the EHR. 2. Clinical Guidelines - The QIC, with the assistance of many THP members, continues to develop clinical practice guidelines in anticipation of a favorable advisory opinion and. the subsequent implementation of the clinical integration program. It is the objective of the QIC to create at least one guideline for each medical specialty THP's members represent. Every physician will be required to comply with the guidelines applicable to their patients. 3. Performance Improvement - Utilizing both the ETG and EBM Connect components of the software, THP's QIC and staffwiJI identify both over- and under-utilization by THP physicians and use that information to work with THP's members on performance improvement activities, with the combined objectives of identifying and promoting "best practices" and moving the mean on key quality indicators (e.g., increasing colorectal cancer screening compliance, lowering HbA 1C percentage scores, and monitoring and improving lipid profile scores). As explained more fully in Section IIIabov€::, TIIP also intends to make use of peer education opportunities. 4. Cost Containment Measures - THP's QAlUM committee, with the support of THP' s staff, wil1 monitor the cost of care for, and use of resources by, each physician. Using report cards, THP will provide feedback to the physicians with comparisons to not only their THP peers but also to regional and national benchmarks. Physicians identified as high cost providers, andlor over/under consumers of resources, will receive assistance from THP staff and case managers and, if necessary, counseling from peer physicians. 5. Patient Compliance Assistance - The nurse case managers, when requested by a physician, will monitor compliance metrics and work with the physician and patient to increase compliance. Physicians who do not avail themselves of this support will be monitored to ensure that they are practicing to program standards and, if they are not, the QIC may recommend intervention by the nurse case managers where appropriate.
o B E R I~~1;c..~ David M. Narrow, Esq. July 18, 2008 Page 29 of 38· 6. Wellness Programs - THP will be developing additional wellness programs with the expectation that its member physicians participate not only in program development but also in supporting and promoting these programs. 7. HRA - Currently, THP highly encourages HRA participants to share the results of their profile with their physicians, but THP does no follow up. After implementation of the clinical integration program, THP and the physicians will work together with the participants to assist them in modifying and lowering their risk. 8. Phannacy Assistance - THP currently conducts focused pharmacy reviews only on patients with chronic diseases. Under the clinical integration program, THP will add to this service assistance with phannacy pre- authorizations and methodologies for increasing generic utilization. A long-term THP objective is for the Pharmacy Benefits Management Committee to develop a single formulary that will apply to all payers contracting with THP. 9. Coding Assistance - As the ERR. is populated with claims data, it is imperative that procedure and diagnosis coding is accurate and thorough .. While the THP leadership fully recognizes that the data "is what it is," it also recognizes that there always will be room for improvement to make the EHR more relevant and actionable· . working closely with its member physicians and their office staffs to ensure appropriate coding. How will the proposed program differ from the utilization and medical. management services currently provided by TriState through its arrangement with InforMed and its CHP network? The utilization and medical management services provided by THP currently benefit those clients who . . such as the WCHSI Payers with which THP contracts under the clinical integration program will be encouraged, and possibly receive special financial incentives, to utilize THP's utilization, case, medical and disease management programs in order to ensure a more seamless provision of care. THP recognizes, however, that the major plans in the THP market have invested significant
o B E R I!i~J-c~~ David M. Narrow, Esq. July 18, 2008 Page 30 of38 resources in providing these services and may not wish to outsource them. Regardless, they will be required to furnish enrollment and claims data to THP in order to populate theEHR. It is important to note that THP's current utilization and medical management services are primarily provided by THP staff, not its member physicians. Thus, they are supplemental services that can greatly benefit, but are not central to, TIIP's clinical integration program, under which physicians will be the key service providers. The utilization management under clinical integration will be done by the QAIUM and QIC committees and will focus more on the use of resources by THP's physicians, as explained above. For plans that do not purchase medical and disease management, THP physicians will have the assistance ofTHP's nurse case managers for working with high- cost and non-compliant patients, so that the physicians will still be able to attain quality and cost benchmarks. VIII. THP Staffing Update THP continues to develop infrastructure to support the PHD and its clinical integration programs. Since our letter of July 9,2007, two additional positions have been added and there has been turnover in one manager position.
o B E R I~~~c!.~ David M. Narrow, Esq. July 18, 2008 Page 31 of38
o B E R I~~__~~~ David M. Narrow, Esq. July 18, 2008 Page 32 of38 IX. Payer Interest THP has presented its clinical integration strategy and use of technology tools to the administrative and clinical leadership of United Healthcare, Coventry and Maryland Physicians Care, and to the local medical director of Aetna. The concept has been presented to the administrative leadership of CareFirst BlueCross BlueShield and to Today's Options, a Medicare private-fee-for-service program that also will be offering PPO and HMO products in the THP market in 2009. No negotiations have ensued with any of these plans. 1. United Healthcare, through its subsidiary Ingenix, owns the Symmetry suite of software that InforMed has implemented to support THP's program. In the summer of 2006, several senior level executives - including a medical director and an information technology senior vice president - visited THP for a 4-hour presentation on the EHR. Due to our ability to capture lab values plus mental health and pharmacy data, United was intrigued by our progress with the technology, admitting that they were not able to use the technology in such a way so as to deliver actionable infonnation directly to a physician desktop. A United senior vice president has indicated that United is keenly interested in working with THP once THP has a favorable advisory opinion. United understands and supports the decision not to move forward with any negotiations until the advisory opinion is received. It is noteworthy to mention that the United executive contacts THP on a quarterly basis to inquire about THP's progress. United purchased MAMSI Health Plans about three years ago. MAMSI's entire senior management team, including the local president,
o B E R I!<~~JCo~~~ David M. Narrow. Esq. July 18, 2008 Page 33 of38 2. 3. have also visited THP and participated in a demonstration. It was their keen interest to United. significant surprise that any provider would be thinking the way THP was thinking; this was a first for him. TIfP is optimistic that United, once it is able to resolve the hurdle offumishing claims data to THP's data warehouse, will be an important future partner. UnitedIMAMSI is the second largest commercial payer in the Washington County market. C fD I h W h' . . ~ c k Coventry is seeking any and all strategies that will enhance its value to employers in our market. Senior executives and the plan medical director have visited, reviewed the technology, and, like United, await the opportunity potentially to partner with us. 4. The local Aetna medical director has visited and reviewed the technology, This physician was clearly 'tnn,rp<:<:pt1 wants to be abreast of 5, Senior leadership ofTHP, Washington County Hospital, and CareFirst BI C BI Shi ld h d' d th cr 'c I 'nte r f n ro ram in ~ . ~ •
o B E R I~~Cw~.I~
David M. Narrow, Esq.
July 18, 2008
Page 34 of38
6. Today's Options is a Medicare Advantage plan currently offering only a
private-fee-for-service (PFPS) product in our market. However, Today's
Options anticipates a migration of the PPPS popUlation to HMO and
PPO products. This will result if Congress takes much-anticipated
action on reducing outlays to the PFFS product, a product that has cost
the federal government, on average, 19 percent more than traditional
Medicare.
Once a favorable advisory opinion is received, THP intends to begin active
discussions with the self-insured under WCHSI Plan,
United, Today's
Irst. e are payers give us the platform
from which to introduce the program to virtually all payers, including other
governmental programs.
X. Pay-for-performance
As noted in the advisory opinion request, THP intends to work with payers to
develop a pay-for-performance ("P4P") model under which THP physicians will have
one set of guidelines and will be held to one set of performance measures, across all
payers, for those guidelines. The following are your questions and our responses
regarding P4P:
Regarding the discussion in your initial submission of a future "pay-for-
performance" component of TriState's operations, it is our understanding- that
your current request for an advisory opinion is not premised on an assertion of
financial integration among TriState's physicians based on this possible future
o B E R I~~~~Co~~ David M. Narrow, Esq. July 18, 2008 Page 35 of38 activity. However, you state that, in order to implement that program, "TriState believes that it will need to collect a year or more·ofperformance data from its physicians, showing the success of its clinical integration strategy for self-insured employers and smaller payers. Thus, it will need to contract on a fee-for-service basis for some period before it is able to implement its P4P program." It is not clear whether you therefore are separately asserting that such fee-for-service contracting is justified at this time as reasonably necessary (i.e., "ancillary") to implementing a financially integrated, efficiency enhancing, joint venture among TriState physicians in the future. THP is not requesting an advisory opinion as to whether its proposed P4P program will result in sufficient financial integration to justify joint contracting. Because THP has not been able to engage in contract-tenn discussions with payers, THP is unsure whether payers will initially include P4P in their contracts with THP and, if they do, what amount of money the payers may place "at risk" for THP meeting specified benchmarks on a set ofperfonnance measures. Without knowing the amount at risk, there is no way for THP, or the FTC staff, to assess whether the amount at risk would provide sufficient incentive to THP's members to work cooperatively to control costs and improve qUality. Although it is possible that THP's P4P program could result in financial integration of its members at some point in the future, THP intends for the P4P program to supplement its clinical integration program and provide a means of partnering with the payers to achieve quality and cost efficiencies. As such, THP is not claiming that its fee-for-service contracting with payers for its clinically integrated product is ancillary to implementing the P4P program. THP's statement in its July 9,2007 letter regarding the need to collect a year or more of data and provide payers evidence of the clinical integration program's success prior to implementing its P4P program was not intended to raise questions as to the legality of the P4P contracting methodology, or joint contracting for the clinical integration product. Rather, the statement was directly related to the preceding supposition regarding payers' potential reticence to set aside their own P4P models. Several of the large payers who have expressed interest in THP's program (as explained above in Section IX) currently have their own P4P programs. If these payers contract with THP on a P4P basis in the first year, they will likely insist that THP participate in the payers' own P4P programs. Hence, THP's argument that payers will most likely need evidence of the clinical integration program's success-achievement of the payers' P4P goals-before those payers will be willing to work cooperatively with THP.
OBER 1~~1£~ David M. Narrow, Esq. July 18, 2008 Page 36 of38 XI. Questions Regarding the Justification for Joint Contracting In your letter, you raised a number of questions regarding THP's need to contract on the collective behalf of member physicians and its asserted justifications. A number of questions raised on pages 4 and 5 relating to the contract physicians are no longer relevant, due to THP's elimination of contract physicians. The following should address the remaining issues. How does TriState's proposed program assure that it will have "the same network for aU integrated product contracts?" Specifically, why isn't TriState's policy of allowing additional pbysicians to join TriState at any time and participate in tbe clinical integration program-whicb necessarily will change the composition of the network-inconsistent with tbis rationale? As explained in Section II above, THP has made the decision to close the PHO after an initial period and to only allow new members to join in limited circumstances. With this new policy in place, THP anticipates that additions and deletions will be minimal, and THP's clinical integration network should remain fairly unifonn after program implementation. There is no expectation that limited additions will have any affect on THP's ability to achieve its efficiency goals, and it is likely that payers and patients will welcome additions, particularly where they fill gaps in THP's network. The minimal additions also should not adversely affect THP's joint contracting rationale of ensuring the same network for all integrated product contracts. In your discussion of the need for joint contracting through TriState, you state (page 29 of your initial submission) that "[a]bsent assurance of participation in TriState's contracts, and thus a share of the revenue generated by those contracts, the physicians would have less incentive to devote substantial time" to the various activities necessary to successfully implement the proposed program. While we understand that physicians may need to recover the opportunity costs of their participation in a program that requires additional time and effort on their part, or desire to make a profit from development of such a program, it is not apparent why that payment or profit needs to come from presumably higher, jointly agreed upon, fee-for-service charge levels by the physicians for their underlying medical services provided'under the program. Although THP does hope to sell a premium product for a premium price, THP did not intend to suggest that THP physicians will not participate in the clinical integration program unless they get paid more than they do currently. Rather, THP physicians will not have a reason to invest their time and effort into the program if they are not guaranteed participation in the THP payer contracts (regardless of the level of reimbursement they receive). Without such investments, the program will not be successful.
OBERI~~!l David M. Narrow, Esq. July 18, 2008 Page 37 of38 XII. Market Power Questions In a recent conversation, you asked whether THP, or THP in combination with WCHSI or its subsidiaries, would have market power in medical services markets or insurance markets. The answer is no. A. THP Will not Have Market Power in the Physician Services Market As we explained in our July 9, 2007 letter, THP will be a non-exclusive network, and, therefore, payers will remain completely free to contract with its participating providers directly or through other organizations. Accordingly, were THP to attempt to exercise market power by raising prices for physician services above competitive, quality-adjusted levels, payers could simply refuse to contract with THP and purchase physician services through other venues. As a result ofTHP's non-exclusivity, payers will be able to defeat any attempt by THP to exercise market power. To obtain payer . contracts, THP will have to price its clinical integration product competitively. B. THP and WCHA Will not Engage in an Illegal Tying Arrangement We understand that concern exists that THP may condition the sale of hospital services on payers' purchasing physician services from it. THP has not tied, and will not tie, hospital services and physician services in contracting with its customers. WCHA also will not tie the sale of its hospital services to payers' purchasing THP's physician services. WCHSI and WCHA are supportive ofTHP's clinical integration program and have much to gain, as discussed above, from THP's success. 7 THP wiU actively market its clinical integration product to payers and, if asked regarding THP's performance, WCHSI representatives will share their Plan's positive experiences indicating that THP can deliver a superior product. But WCHA will not force any payer to buy THP's clinically integrated product bl conditioning the sale ofWCHA's hospital services on the payer contracting with THP. 7 See the discussion in Section IV regarding the advantages and disadvantages to WCHA for its participation in THP. . THP and WCHA understand that the advisory opinion will be based on their representations. Assuming that the opinion is positive (i.e., Commission staffwill not recommend an enforcement action ifTHP proceeds with implementation), both parties know that engaging in activities counter to their representations could result in rescission of the opinion and an enforcement action by the Commission.
OBERI~~"k!~ David M. Narrow, Esq. July 18, 2008 Page 38 of38 C. THP and WCBSI Cannot Monopolize the Private Insurance Market THP and WCHSI, through its subsidiaries, sell products and services to self~ insured employers and health insurance plans. Neither THP nor WCHSI sell private health insurance. 9 A company cannot monopolize or attempt to monopolize a market in which it does not compete. Therefore, THP, by itself or through some arrangement with WCHSI, cannot monopolize, attempt to monopolize, or obtain any market power at all in the market for private health insurance. **************************** THP appreciates the opportunity to respond to your questions and concerns. They have attempted to respond to your questions in as complete a manner as possible. If you have any questions regarding any of the above responses or any additional questions or concerns with their proposed program, please let me know. Best regards, Enclosures 9 WCHSI and three other health systems own Maryland Physicians Care, a Maryland Managed Care Organization that is licensed to provide health care services to Medicaid enrollees in Maryland's HealthChoice program.
Exhibit A
WCHSI TRISTATE
SPECIALTY EMPLOYED s MEMBERS s TOTALs
Allergy, AsthmalImmunology 0 2 (1) 2(1)
Anesthesiology 0 9 (1J 9(11
Cardiology 0 14 (4) 14 (4)
Dermatology 0 3 (2) 3 (2)
Endocrinology 1 (1) 1 (I) 2{2)
Family Practice 12(4) 14 (9) 26 (13)
Gastroenterology 4 (1) 4 (2) 8 (3)
General Surgery 1 (1) 7 (6) 8 (7)
G~ecology 0 IJ1) 1 (1)
Internal Medicine Primary Care 12 (4) 18 (13) 30 (17)
Medical Oncolo~ 0 1 (1) 1 (1)
Nephrology 0 2 (1) 2 (1)
Neurology 0 7 (5) 7(5)
Neurosurgery 0 4 (1) 4 (1)
Nuclear MedicinelNuclear Cardiology 1 (1) 0 1 (I)
Obstetrics/Gynecology 6 (2) 8(3) 14 (5)
Ophthalmology 0 2 (2) 2 (2)
Oral & Maxillofacial Surgery 0 5 (2) 5 (2)
Orthopedics 1 (1) 12 (3) 13 (4)
Otolaryngology 0 7 (3) 7 (3)
Pain Management 0 4 (3) 4 (3)
Pathology 0 4 (1) 4(1)
Pediatrics Primary Care 0 12(4) 12{4)
Physical MedicinelRehabilitation 0 4 (2) 4 (2)
Plastic Surgery 0 1 (1) 1 (1)
Podiatry 0 8 (3) 8 (3)
Psychiatry 3 (1) 0 3 (1)
Pulmonary Disease 0 5 (1) 5 (1)
Radiation Oncology 0 1 (1) 1 (l)
Radiology 0 10 (1) 10 (l)
Urology 0 1 (1) 1(1)
TOTALS 41 171 212
19% 81% 100%
SThe first numbers in the column represent the total number of TriState physicians in each specialty, and
the number in parentheses represent the number of medical groups within which those physicians practice.
Revised July 8, 2008
Exhibit B
TRISTATE MEMBER
PARTICIPATING PROVIDER CONTRACT - CLINICAL INTEGRATION
This participating provider contract ("Contract") is made as of this __ day of
_____, 200_ between Tri~State Health Partners, Inc. ("THP"), a Maryland nonstock
corporation, and the provider identified below ("Provider"), who is a member of THP.
PROVIDER:
Name: ------------------
Address: ------------------
Telephone Number: ______________
Medical Specialty: ____________
Braun, Christi J. From: Sent: To: Subject: David, Braun, Christi J. Thursday, February 26, 2009 1:50 PM 'dnarrow@ftc.gov' THP TriState Health Partners The following responds to your e-mailed questions of February 18, 2009. 01: The statistics you provided regarding payer penetration/percentage of covered lives in the "market" did not specify whether they referred to TriStatelWCHA's primary service area (essentially Washington County, MD), to the larger secondary service area, or equally to both. A 1: We assume your question relates to the information in the paragraph under Section II.C. of the request letter. The statistics represent the payer mix of the majority of WCHSI business units (Le., WCHA, Medical Practices of Antietam, Hagerstown Medical Laboratory, and the joint ventures including Robinwood Diagnostic Imaging Services, Endoscopy Center at Robinwood, and Robinwood Surgery Center). That is, the statements in the section explain who pays for the services WCHSI provides to patients. Thus, in answer to your question, the service area referred to is WCHSl's service area, which is the area from which more than 90% of WCHSl's patients come. THP has no reason to believe, though, that the statistics would be different if it looked only at patients residing in Washington County, Maryland, which is roughly its primary service area. Recently, WCHSI completed a review of its payer mix for fiscal year 2008. The numbers that would replace those in Section II.C for 2008 are: self-pay 4.4%; Medicare, Medicaid and TriCare 48.3%; workers comp 1.2%; and all other (includes private health insurance and self-insured employers) 46.1%. CareFirst BCBS and United/MAMSI were 70.9% of all other. THP does not have access to the payers' actual market share numbers for either the primary service area or secondary service area. It believes, though, that WCHSl's payer mix provides a fairly accurate approximation of payer market shares for two reasons. First, WCHSI is an in-network participant for all third-party payers, so there is no financial incentive for patients to avoid seeking care from WCHSI providers. Second, WCHSl's payer mix is calculated across a broad range of health care provider types (in-patient and out-patient hospital, physician, urgent care, lab, diagnostic imaging, and ASC services) and is, therefore, likely to have provided services to a broad section of the populations of both the primary and secondary service markets. 02: Re the Board. It consists of eight Class I representatives and five Class II representatives, appointed by WCHA. One of the Class I Board members must be a "hospital-based" physician. Can he/she be a hospital-employed physician? Are physicians employed by WCHAlWCHSI Class I members? If so, can WCHA effectively have a majority of the TriState Board, through its five Class II member representatives plus some Class I members who are its or its affiliates' (e.g., Antietem's) employees? A2a: The individual currently filling the THP Board position of "hospital-based" physician is not employed by WCHA or Antietam. In fact, all hospital-based Class I members currently are employed by their own PA or PC. Thus, at this time, no hospital-based physician Board member could be a hospital-employed physician. A2b: Physicians employed by WCHAlWCHSI can serve as Class I directors. To do so, they must be elected by the affirmative vote of a majority of Class I Members at a meeting at which at least 25 percent of all Class I Members are present. A2c: You ask whether WCHA (or WCHSI) could employ a majority of the Board. We think what you actually want to know is whether WCHA (or WCHSI) could ever employ enough of the THP Board members to control the Board. Employing a majority would not give THP control of the Board. To actually control the decisions of the Board, WCHSI would need to employ at least five of the Class I Directors, or 10 out of the 13 Board positions. The reason is that, under Section. of 1
the Bylaws, an act of the Board requires an affirmative vote of a majority of Class I Directors present and an affirmative vote of a majority of Class II Directors present. In the highly unlikely event that THP's physician members were i Class I Board could not do so. employed by WCHSI (inclusive of its subsidiaries) can horotnlro neither WCHA nor WCHSI will ever employ five Class I In addition, one should not assume that a hospital-employed physician would automatically vote in the same manner as the hospital, particularly if the decision would go against the wishes of the peers who elected him or her. Please let me know if you need additional clarification of any of the above answers. -Christi Christi J. Braun, Esq. 202-326-5046 cjbraun@ober.com OBERIKALER Attorneys at Law www.ober.com 202-336-5246 - Fax 1401 H Street, NW, Suite 500 Washington, DC 20005 2
Ober. Kaler, Grimes & Shriver
Attorneys at Law
1401 H Street. NW, Suite 500
Washington, DC 20005-3324
202-408-8400 Fax 202-408-0640
www.ober.com
Mr. Donald S. Clark
Secretary
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Dear Mr. Clark:
May 8, 2009
Christi J. Braun
cjbraun@ober.com
202-326-5046
202-336-5246 Fax
Offices In
Maryland
Washington, D.C.
Virginia
On April 13, 2009, Commission staff in the Health Care Products & Services
Division issued an advisory opinion to TriState Health Partners, Inc. ("TriState"). I have
been informed that the Commission would like to post TriState's submissions to the
Commission and Commission staff on the FTC's web site with the advisory opinion. In its
advisory opinion request and follow-up submissions, TriState complied with FTC Procedure
Rule 4.9(c), 16 C.F.R. § 4.9(c), designating certain information and documents as
"confidential" and requesting that it be withheld from the public record under FTC Procedure
Rule 4.10, 16 C.F.R. § 4.10(a)(2), and § 6(f) ofthe Federal Trade Commission Act, 15
U.S.C. § 46(f).
To allow the Commission to post TriState's documents on the Commission's web
site, I have redacted all confidential information and mentions of confidentiality from the
"public version" documents, which are attached to this letter. Where documents were
withheld in their entirety, there are place-holder pages. All information withheld is
competitively sensitive information, including prices, costs, and information subject to
confidentiality agreements, patents, or copyright protection.
If you have any questions regarding the attached package, please call me at (202)
326-5046.
Sincerely,
cc: David M. Narrow, Esquire
Attachment
148784.vl
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