FTC Staff Comment Before the Connecticut General Assembly Labor and Employees Committee Regarding Connecticut House Bill 6431 Concerning Joint Negotiations by Competing Physicians in Cooperative Health Care Arrangements

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Office of Policy Planning
Bureau of Economics
Bureau of Competition
June 4, 2013
The Hon. Catherine Osten and the Hon. Peter Tercyak, Co-Chairs
Labor and Public Employees Committee, Connecticut General Assembly
Legislative Office Building, Room 3800
Hartford, CT 06106
Re: Request for Comment on H.B. 6431
Dear Senator Osten and Representative Tercyak:
The staffs of the Federal Trade Commission=s Office of Policy Planning, Bureau
of Competition, and Bureau of Economics1 are pleased to respond to your request for
comment on the potential competitive impact of Connecticut House Bill 6431, “An Act
Concerning Cooperative Health Care Arrangements,” as amended by LCO Number 6504
(“H.B. 6431” or “the Bill”).2 The Bill provides for the formation of “health care
collaboratives” comprising otherwise independent health care practitioners. 	The Bill
would authorize these and similar “prospective” entities to jointly negotiate prices and
other terms with health plans. It also attempts to immunize these joint negotiations from
scrutiny under the antitrust laws.
FTC staff recognize that collaborations among physicians and other health care
professionals can be fruitful. At the same time, we write to express strong concerns that
the Bill is based on inaccurate premises about the antitrust laws and the value of
competition among physicians. 	If enacted, it will very likely benefit only participating
physicians, who seek to enhance their bargaining power in selling their services, while
harming health care competition and health care consumers in Connecticut.
 	First, the antitrust laws are not a barrier to the formation of efficient health
care collaborations that benefit health care consumers. 	As explained in
extensive guidance issued by the federal Antitrust Agencies, competitor
collaborations – including health care provider collaborations – often are
entirely consistent with the antitrust laws.
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

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 	Second, a central purpose of the Bill appears to be to permit physicians to
extract 	higher 	reimbursement 	rates 	from 	health 	plans 	through 	joint
negotiations, not to integrate their practices to reduce costs or better
coordinate care for their patients.
 	Third, because procompetitive health care collaborations already are
permissible under the antitrust laws, the Bill’s main effect would be to
foster precisely those types of collective negotiations that would not
generate efficiencies and therefore would not pass muster under the
antitrust laws. 	The joint negotiations contemplated by the Bill are likely
to lead to increased health care costs and decreased access to health care
services for Connecticut consumers.
This Bill raises competition concerns similar to those raised by proposals for
“Cooperative Health Care Arrangements” considered in prior sessions of the Connecticut
General Assembly. 	As you may know, FTC staff reviewed one such bill in 2011,3 and
the analysis in that letter (attached) still applies. 	Connecticut Attorney General George
Jepson’s recent testimony before your committee, in opposition to the Bill as introduced,
reflects many of the same concerns.4
I. 	Interest and Experience of the Federal Trade Commission
Congress has charged the Federal Trade Commission (“FTC” or “Commission”)
with enforcing the Federal Trade Commission Act, which prohibits unfair methods of
competition and unfair or deceptive acts or practices in or affecting commerce.5
Competition is at the core of America's economy, 6 and vigorous competition among
sellers in an open marketplace gives consumers the benefits of lower prices, higher
quality goods and services, greater access to goods and services, and innovation. 7
Pursuant to its statutory mandate, the FTC seeks to identify business practices and
governmental laws and regulations that may impede competition without also providing
countervailing benefits to consumers.
Because of the importance of health care competition to the economy and
consumer welfare, anticompetitive conduct in health care markets has long been a key
focus of FTC law enforcement,8 research,9 and advocacy.10 Of particular relevance, the
Commission and its staff have long advocated against federal and state legislative
proposals that seek to create antitrust exemptions for collective negotiations by health
care providers, as such exemptions are likely to harm consumers.11

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II. 	The Connecticut Bill
As noted above, the Bill (as amended) provides for the formation of “health care
collaboratives” – certain collaborations or joint ventures of otherwise independent health
care practitioners.12 The Bill further provides that any such collaborative, and any
“prospective health care collaborative,” may jointly negotiate price and other terms with
health plans.13 All health plans – broadly defined to include any entity, large or small,
“that pays for health care services”14 – would be required to negotiate with such
collaboratives “in good faith,”15 subject to mandatory mediation by a state-designated
mediator should negotiations prove unsuccessful. 16 Health plans – but not collaboratives
– would be subject to large monetary penalties for failing to negotiate as required.17
Finally, the Bill appears to intend that these joint negotiations will occur unconstrained
by the antitrust laws.18
III. 	The Bill Is Unnecessary Because the Antitrust Laws Already Permit
Efficient Health Care Collaborations
A fundamental premise of the Bill is that efficient, procompetitive collaborations
among otherwise independent health care providers are prohibited under the antitrust
laws, to the detriment of health care consumers. 	Testimony by numerous physician
groups supporting the Bill stated, “federal antitrust laws prohibit Connecticut physicians
from collective discussions about certain critical aspects of care coordination,” including
the kinds of negotiations necessary to form Accountable Care Organizations (“ACOs”),19
as contemplated by the Patient Protection and Affordable Care Act (“ACA”). 20 This
premise is simply and categorically wrong.
The antitrust laws already recognize, and have long stood for the proposition, that
competitor collaborations can be procompetitive. 	To assist the business community in
distinguishing between lawful and potentially harmful forms of competitor collaboration,
the FTC and its sister federal antitrust agency, the U.S. Department of Justice (“DOJ”)
(together, “the Antitrust Agencies”), have issued considerable guidance over the years.
Key 	sources 	of 	guidance 	include 	the 	Antitrust 	Agencies’ 	general 	guidelines 	on
collaborations among competitors,21 as well as joint statements specifically addressing
the application of the antitrust laws to the health care industry, including physician
network joint ventures and other provider collaborations.22 In addition, FTC staff have
issued and made public numerous advisory opinion letters containing detailed analyses of
specific proposed health care collaborations.23 These letters have helped the requesting
parties avoid potentially unlawful conduct as they seek to devise new ways of responding
to the demands of the marketplace. 	They also have provided further guidance to the
health care industry as a whole.
ACOs neither need, nor deserve, special treatment under the antitrust laws. ACOs
are intended to comprise “providers who are jointly held accountable for achieving
measured quality improvements and reductions in the rate of spending growth.” 24
Antitrust analysis recognizes and takes into account procompetitive effects such as cost
savings and quality improvements, and in this manner is entirely consistent with the goals

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of the ACO program. 	Many ACOs already have been formed, both for participation in
Medicare’s Shared Savings Program (introduced by the ACA) and for offering services to
commercial markets. 	In January 2013, the Centers for Medicare and Medicaid Services
(“CMS”) announced that more than 250 ACOs already had been established under its
own programs, 25 with roughly half being “physician-led organizations that serve fewer
than 10,000 beneficiaries.” 26 Hundreds of additional ACO-type organizations reportedly
have formed outside the Medicare program. 27 This empirical evidence belies claims that
antitrust concerns are chilling the development of physician-sponsored ACOs.
The 	Antitrust 	Agencies 	have 	been 	closely 	involved 	in 	providing 	guidance
concerning both Medicare and commercial ACO formation, to ensure that the prospect of
antitrust liability does not impede the formation of beneficial ACOs.28 As CMS noted in
publishing the final ACO rules, CMS and the Antitrust Agencies “worked very closely …
to develop policies to encourage participation and ensure a coordinated and aligned inter-
and intra-agency program implementation.”29 On the same day the CMS ACO rules were
published, the Antitrust Agencies released a joint statement explaining their enforcement
policy approach to ACOs “to ensure that health care providers have the antitrust clarity
and guidance needed to form procompetitive ACOs that participate in both Medicare and
commercial markets.” 30 In addition, the FTC/DOJ ACO policy statement establishes a
process for newly formed ACOs to seek expedited antitrust guidance if they are
concerned about potential antitrust exposure.31 As of April 2013, two provider groups
had availed themselves of this option.32 The Antitrust Agencies continue to engage in
interagency collaboration, as well as consultation with physician groups and other
stakeholders.33
Thus, the antitrust laws do not stand in the way of health care providers in
Connecticut who form ACOs or other collaborative arrangements that are likely to reduce
costs and benefit health care consumers through improved efficiency and improved
coordination of care.
IV. 	Conferring Additional Bargaining Power on Groups of Otherwise
Competing Physicians Poses a Substantial Risk of Consumer Harm
Given that efficient collaborations among health care providers already are
consistent with the antitrust laws, FTC staff are concerned that the Bill will only serve to
encourage conduct that likely would not pass muster under the antitrust laws because it
would reduce competition, raise prices, and provide relatively small or no benefits to
consumers. 	Any effort to shield such harmful conduct from antitrust enforcement –
including attempts to confer state action immunity – is likely to harm Connecticut health
care consumers.
In its 2007 report, the bipartisan Antitrust Modernization Commission succinctly
stated a widely recognized proposition: “[t]ypically, antitrust exemptions create economic
benefits that flow to small, concentrated interest groups, while the costs of the exemption
are widely dispersed, usually passed on to a large population of consumers through
higher prices, reduced output, lower quality and reduced innovation.” 34 In other words,

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antitrust exemptions threaten broad consumer harm while benefitting only certain market
participants.
Yet, health care providers repeatedly have sought antitrust immunity for various
forms of joint conduct, including agreements on the prices they will accept from payers,
asserting that immunity for joint bargaining is necessary to “level the playing field” so
that providers can create and exercise countervailing market power.35 In a 2004 report on
health care competition, the Antitrust Agencies jointly responded to and countered this
argument:
Some physicians have lobbied heavily for an antitrust exemption to allow
independent physicians to bargain collectively. They argue that payors
have market power, and that collective bargaining will enable physicians
to exercise countervailing market power. The Agencies have consistently
opposed these exemptions, because they are likely to harm consumers by
increasing costs without improving quality of care. The Congressional
Budget Office estimated that proposed federal legislation to exempt
physicians from antitrust scrutiny would increase expenditures on private
health insurance by 2.6 percent and increase direct federal spending on
health care programs such as Medicaid by $11.3 billion.36
The Bill under consideration in Connecticut arguably would permit precisely this
form of anticompetitive bargaining between independent health care providers.37
V. 	Antitrust Exemptions That Immunize Otherwise Anticompetitive Conduct
Pose a Substantial Risk of Consumer Harm and Are Disfavored
The U.S. Supreme Court recently reiterated its long-standing position that, “given
the antitrust laws' values of free enterprise and economic competition, ‘state-action
immunity is disfavored.’”38 This principle applies with equal force in the health care
industry, where consumers benefit from vigorous competition, and where anticompetitive
conduct can cause significant harm.39 As discussed above, antitrust law permits many
forms of procompetitive collaborations among health care providers. Antitrust laws also
serve the important function of protecting health care consumers from pernicious forms
of joint conduct, which is why antitrust immunity for otherwise-anticompetitive provider
collaborations is likely to harm consumers. 	Given the substantial risk that the Bill will
encourage the formation of inefficient and anticompetitive collaborations among health
care providers, we urge Connecticut legislators not to attempt to shield them from the
antitrust laws by attempting to invoke the state action doctrine.
Conclusion
Our analysis of H.B. 6431, as amended, suggests that its passage would pose a
significant risk of harm to Connecticut consumers. The Bill’s attempt to confer antitrust
immunity is unnecessary for legitimate collaborations and, if effective, would encourage
groups of private health care providers to engage in blatantly anticompetitive conduct. In
summary, FTC staff is concerned that this legislation is likely to foster anticompetitive

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conduct that is inconsistent with federal antitrust law and policy, and that such conduct
could work to the detriment of Connecticut health care consumers.
We appreciate your consideration of these issues.
Respectfully submitted,
Andrew I. Gavil, Director
Office of Policy Planning
Howard Shelanski, Director
Bureau of Economics
Richard A. Feinstein, Director
Bureau of Competition
Attachments
1 This letter expresses the views of the Federal Trade Commission’s Office of Policy Planning, Bureau of
Competition, and Bureau of Economics. The letter does not necessarily represent the views of the Federal
Trade Commission (Commission) or of any individual Commissioner. The Commission has, however,
voted to authorize staff to submit these comments.
2 Letter from the Hon. Catherine Osten and the Hon. Peter Tercyak, Connecticut General Assembly, to
Andrew I. Gavil, Director, Office of Policy Planning, Fed. Trade Comm’n, May 20, 2013.
3 FTC Staff Comment to Senators Coleman and Kissel and Representatives Fox and Hetherington,
Connecticut General Assembly, Concerning Connecticut H.B. 6343, Intended To Exempt Members of
Certified Cooperative Arrangements From the Antitrust Laws (June 2011), available at
http://www.ftc.gov/os/2011/06/110608chc.pdf.
4 Testimony of Attorney General George Jepson Before the Comm. on Labor and Pub. Employees (Mar. 5,
2013) (regarding AG’s opposition to H.B. 6431, as introduced); see also Testimony of Attorney General
George Jepson Before the Comm. on Labor and Pub. Employees (Feb. 28, 2012) (regarding AG’s
opposition to prior “cooperative health care arrangements” bill, S.B. 182).

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5 Federal Trade Commission Act, 15 U.S.C. ' 45.
6 Standard Oil Co. v. FTC, 340 U.S. 231, 248 (1951) (“The heart of our national economic policy long has
been faith in the value of competition.”).
7 See Nat’l Soc. of Prof. Engineers v. United States, 435 U.S. 679, 695 (1978) (The antitrust laws reflect “a
legislative judgment that ultimately competition will produce not only lower prices, but also better goods
and services. . . . The assumption that competition is the best method of allocating resources in a free
market recognizes that all elements of a bargain – quality, service, safety, and durability – and not just the
immediate cost, are favorably affected by the free opportunity to select among alternative offers.”).
8 See generally Fed. Trade Comm’n, An Overview of FTC Antitrust Actions In Health Care Services and
Products (Mar. 2013), available at http://www.ftc.gov/bc/healthcare/antitrust/hcupdate.pdf; see also Fed.
Trade Comm’n, Competition in the Health Care Marketplace: Formal Commission Actions, available at
http://www.ftc.gov/bc/healthcare/antitrust/commissionactions.htm.
9 See, e.g., F ED. TRADE COMM ’ N & U.S. D EP ’ T OF J USTICE (“DOJ”), I MPROVING H EALTH CARE: A D OSE OF
COMPETITION (2004), available at http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf
[hereinafter FTC & DOJ, I MPROVING H EALTH CARE ]. The report was based on, among other things, 27
days of formal hearings on competitive issues in health care, an FTC sponsored workshop, independent
research, and the Agencies’ enforcement experience.
10 FTC and staff advocacy may comprise letters or comments addressing specific policy issues,
Commission or staff testimony before legislative or regulatory bodies, amicus briefs, or reports. See, e.g.,
FTC Staff Letter to the Honorable Theresa W. Conroy, Connecticut House of Representatives, Concerning
the Likely Competitive Impact of Connecticut House Bill 6391 on Advance Practice Registered Nurses
(“APRNs”) (Mar. 2013), available at http://www.ftc.gov/os/2013/03/130319aprnconroy.pdf (competitive
impact of statutorily required “collaborative practice agreements” for nurse practitioners); FTC and DOJ
Written Testimony Before the Illinois Task Force on Health Planning Reform Concerning Illinois
Certificate of Need Laws (Sept. 2008), available at http://www.ftc.gov/os/2008/09/V080018illconlaws.pdf;
Brief of the Fed. Trade Comm’n as Amicus Curiae, St. Joseph Abbey, et al. v. Castille, 712 F.3d 215 (5th
Cir. 2013) (No. 11-30756) (refuting argument that the policies of FTC funeral rule support restrictions of
sort challenged by petitioner); FTC & DOJ, IMPROVING H EALTH CARE, supra note 9.
11 See, e.g., FTC Staff Comment to Senators Coleman and Kissel and Representatives Fox and
Hetherington, Connecticut General Assembly, supra note 3; FTC Staff Comment to the Hon. Elliott
Naishtat Concerning Texas S.B. 8 to Exempt Certified Health Care Collaboratives From the Antitrust Laws
(May 2011), available at http://www.ftc.gov/os/2011/05/1105texashealthcare.pdf; FTC Staff Comment to
Rep. Tom Emmer of the Minnesota House of Representatives Concerning Minnesota H.F. No. 120 and
Senate Bill S.F. No. 203 on Health Care Cooperatives (Mar. 2009), available at
http://www.ftc.gov/opp/advocacy/V090003.pdf; FTC Staff Comment to the Hon. William J. Seitz
Concerning Ohio Executive Order 2007-23S to Establish Collective Bargaining for Home Health Care
Workers (Feb. 2008), available at http://www.ftc.gov/os/2008/02/V080001homecare.pdf; FTC Staff
Comment Before the Puerto Rico House of Representatives Concerning S.B. 2190 to Permit Collective
Bargaining by Health Care Providers (Jan. 2008); available at
http://www.ftc.gov/os/2008/02/v080003puerto.pdf (all advocacies available at
http://www.ftc.gov/opp/advocacy_date.shtm). See also Prepared Statement of the Fed. Trade Comm’n
Before the H. Comm. on the Judiciary, Subcomm. on Intellectual Property, Competition, and the Internet
Concerning H.R. 1946, the “Preserving Our Hometown Independent Pharmacies Act of 2011,” Mar. 29,
2012, available at http://www.ftc.gov/os/testimony/120329pharmacytestimony.pdf.
12 H.B. 6431 §§ 1-2.
13 Id. at § 2(a).
14 Id. at § 1(4) (“‘Health plan’ means an entity that pays for health care services, including, but not limited
to, commercial health insurance plans, self-insurance plans, health maintenance organizations, managed
care organizations, as defined in section 38a-478 of the general statutes, or any insurer or corporation
subject to the insurance laws of this state.”).

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15 Id. at § 4(d)(1).
16 Id. at § 4(b), (b)(1)-(3).
17 Id. at § 4(d)(1)-(2) (providing that civil penalties up to $25,000 per day, per each distinct violation, may
apply to any health plan that violates pertinent provisions).
18 Id. at §2(a) (stipulating that joint negotiations may take place “[n]otwithstanding the antitrust laws”).
The raised bill purports “[t]o permit health care providers to enter into cooperative arrangements that would
not be subject to certain antitrust laws,” Conn. Gen. Assembly, Raised H.B. No. 6431, Session Year 2013,
available at
http://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&bill_num=HB6431&which_ye
ar=2013#. According to an analysis by the General Assembly’s Office of Legislative Research, the Bill
would, at the least, “generally exempt [approved collaboratives] from state antitrust laws.” Conn. Gen.
Asembly OLR Bill Analysis, available at http://www.cga.ct.gov/2013/BA/2013HB-06431-R000217-
BA.htm.
19 Conn. State Medical Soc’y, Am. Coll. Surgeons Conn. Chapter, Am. Coll. Physicians Conn. Chapter,
Conn. Orthopaedic Soc’y, Conn. Soc’y of Eye Physicians, Conn. Dermatology & Dermatologic Surgery
Soc’y, Conn. ENT Soc’y, & Conn. Urology Soc’y, Testimony in Support of House Bill 6431 An Act
Concerning Cooperative Health Care Arrangements, Presented to the Labor & Pub. Employees Comm.
(Mar. 5, 2013).
20 Pub. L. No. 111-148, § 3022, 14 Stat. 119, 395 (“Affordable Care Act”).
21 Fed. Trade Comm’n & U.S. Dep’t of Justice, Antitrust Guidelines for Collaborations Among
Competitors (Apr. 2000), available at http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf.
22 Fed. Trade Comm’n & U.S. Dep’t of Justice Statements of Antitrust Enforcement Policy In Health Care
(1996), available at http://www.ftc.gov/bc/healthcare/industryguide/policy/index.htm. See, e.g., id. at
Statement 8 (physician network joint ventures), Statement 7 (joint purchasing arrangements among
providers of health care services), and Statement 6 (provider participation in exchanges of price and cost
information).
23 See, e.g., Letter from Markus H. Meier, Fed. Trade Comm’n to Michael E. Joseph, Esq., McAfee & Taft,
Re: Norman PHO Advisory Opinion, Feb. 13, 2013, available at
http://www.ftc.gov/os/2013/02/130213normanphoadvltr.pdf; Letter from Markus H. Meier, FTC to Christi
Braun, Ober, Kaler, Grimes & Shriver, Re: TriState Health Partners, Inc. Advisory Opinion, Apr. 13, 2009,
available at http://www.ftc.gov/os/closings/staff/090413tristateaoletter.pdf; Letter from Markus Meier,
FTC to Christi Braun & John J. Miles, Ober, Kaler, Grimes & Shriver, Re: Greater Rochester Independent
Practice Association, Inc. Advisory Opinion, Sept. 17, 2007, available at
http://www.ftc.gov/bc/adops/gripa.pdf.
24 Mark McClellan et al., A National Strategy to Put Accountable Care into Practice, 29 HEALTH A FFAIRS
982, 982 (2010).
25 Ctrs. Medicare & Medicaid Servs., Press Release, More Doctors, Hospitals Partner to Coordinate Care
for People with Medicare (Jan. 10, 2013), available at
http://www.cms.gov/apps/media/press/release.asp?Counter=4501&intNumPerPage=10&checkDate=&chec
kKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C
+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date.
26 Id. In addition, “[a]pproximately 20 percent of ACOs include community health centers, rural health
clinics and critical access hospitals that serve low-income and rural communities.” Id.
27 For example, David Muhlestein has estimated “428 total ACOs now existing in 49 states.” David
Muhlestein, Continued Growth of Public and Private Accountable Care Organizations, H EALTH A FFAIRS
BLOG (Feb. 19, 2013) (counting, e.g., ACOs formed solely on the private side and those negotiated directly
with state Medicaid programs), available at http://healthaffairs.org/blog/2013/02/19/continued-growth-of-
public-and-private-accountable-care-organizations/; cf. McClellan et al., supra note 24, at 983 (describing

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diverse ACOs including, as of 2010, a Brookings/Dartmouth Accountable Care Collaborative comprising
“approximately sixty provider systems across the country.”).
28 See generally Susan S. DeSanti, ACO Antitrust Guidelines: Coordination Among Federal Agencies, 11-2
A NTITRUST S OURCE 1 ( Dec. 2011).
29 Dep’t Health & Human Servs., Ctrs. Medicare & Medicaid Servs. (“CMS”), 42 CFR Part 425, Medicare
Program; Medicare Shared Savings Program: Accountable Care Organizations (Final Rule), 76 Fed. Reg.
67802, 67804 (Nov. 2, 2011).
30 Fed. Trade Comm’n & U.S. Dep’t. of Justice Working Group Issues Summary of Activities Since
October 2011 Release of ACO Antitrust Enforcement Policy (Apr. 10, 2013), available at
http://www.ftc.gov/bc/healthcare/aco/mssp-summary.pdf. The policy statement itself is, Fed. Trade
Comm’n and U.S. Dep’t of Justice: Statement of Antitrust Enforcement Policy Regarding Accountable
Care Organizations Participating in the Medicare Shared Savings Program, 76 Fed. Reg. 67026 (Oct. 28,
2011) [hereinafter FTC/DOJ ACO Policy Statement] (explaining Agency views on operations of ACOs in
private health care markets as well as the Medicare Shared Savings Program).
31 FTC/DOJ ACO Policy Statement, supra note 30, at 67030-31.
32 Fed. Trade Comm’n & U.S. Dep’t. of Justice Working Group Issues Summary, supra note 30.
33 The CMS final rule, and the FTC/DOJ policy statement, followed extensive research and consultation by
the agencies with key stakeholders in the health care community. For example, in 2010, the FTC, CMS,
and HHS jointly sponsored a public workshop to explore ACO-related issues, with formal participation by
physician groups, payers, institutional providers, regulators, and academics, among others, and with written
comments solicited from the public at large. Information regarding the “Workshop Regarding Accountable
Care Organizations and Implications Regarding Antitrust, Physican Self-Referral, Anti-Kickback and Civil
Monetary Penalty Laws,” held at CMS on Oct. 5, 2010, with links to the agenda, public comments, and
workshop transcripts, can be found at http://www.ftc.gov/opp/workshops/aco/index.shtml#webcast. The
Commission held a second public workshop to explore ACO formation issues – including issues raised by
the proposed FTC/DOJ ACO policy statement – in May 2011. Information regarding the FTC’s May 9,
2011 workshop, “Another Dose of Competition: Accountable Care Organizations and Antitrust,” can be
found at http://www.ftc.gov/opp/workshops/aco2/index.shtml.
34 A NTITRUST M ODERNIZATION COMM’ N, REPORT AND R ECOMMENDATIONS 335 (2007), available at
http://govinfo.library.unt.edu/amc/report_recommendation/amc_final_report.pdf.
35 In general, the Supreme Court has flatly rejected the notion that members of the learned professions
should be free from antitrust scrutiny: “The nature of an occupation, standing alone, does not provide
sanctuary from the Sherman Act . . . nor is the public-service aspect of professional practice controlling in
determining whether § 1 includes professions.” Goldfarb v. Va. State Bar, 421 U.S. 773, 787 (1975); see
also Nat’l Soc’y Prof’l Engineers, 435 U.S. 679, 695 (1978) (Supreme Court rejection of argument that
competition itself poses a “potential threat . . . to the public safety”); FTC v. Indiana Fed’n of Dentists, 476
U.S. 447 (1986).
36 FTC & DOJ, IMPROVING H EALTH CARE, supra note 9, at 14. For example, a recent FTC enforcement
action concerned “an agreement among eight independent nephrologists in southwestern Puerto Rico to fix
the prices and the conditions under which they would participate in ‘Mi Salud,’ the Commonwealth of
Puerto Rico’s Medicaid program for providing healthcare services to indigent residents. In furtherance of
their conspiracy, Respondents collectively terminated their participation in the Mi Salud program in
southwestern Puerto Rico after the program’s regional administrator . . . refused to accede to Respondents’
demands to restore a cut in reimbursements for certain patients eligible for benefits under both Medicare
and Mi Salud (“dual eligibles”). After Respondents terminated their service agreements with Humana, they
refused to treat any of Humana’s Mi Salud patients.” In the Matter of Práxedes E. Alvarez Santiago, M.D.,
Daniel Pérez Brisebois, M.D., Jorge Grillasca Palou, M.D., Rafael Garcia Nieves, M.D., Francis M.
Vázquez Roura, M.D., Angel B. Rivera Santos, M.D., Cosme D. Santos Torres, M.D., and Juan L. Vilaró
Chardón, M.D., FTC File No. 121-0098, C-4402 (Complaint), 2 (May 3, 2013), available at
http://ftc.gov/os/caselist/1210098/130503prnephrologistscmpt.pdf.

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37 In addition, the asymmetric “good faith” negotiation requirement and threat of very large fines,
applicable to all health plans, large and small (supra note 17), will likely decrease the incentives of
cooperatives to compete on price and quality. It will also likely impede the ability of health plans to use
selective contracting, a key mechanism for promoting quality and cost-containment goals.
38 FTC v. Phoebe Putney Health System, Inc., 133 S. Ct. 1003, 1010 (2013) (quoting FTC v. Ticor Title
Ins. Co., 504 U. S. 621, 636 (1992)); see also North Carolina State Bd. of Dental Examiners v. FTC, No.
12-1172 (4th Cir. May 31, 2013) (no state action immunity for dental board that sought to exclude non-
dentist competitors in teeth whitening services).
39 FTC v. Phoebe Putney, 133 S. Ct. at 1015 (state legislature’s objective of improving access to affordable
health care does not logically suggest contemplation of anticompetitive means, and “restrictions [imposed
upon hospital authorities] should be read to suggest more modest aims.”). As the U.S. Court of Appeals for
the Fourth Circuit has observed, “[f]orewarned by the [Supreme Court’s] decision in National Society of
Professional Engineers . . . that it is not the function of a group of professionals to decide that competition
is not beneficial in their line of work, we are not inclined to condone anticompetitive conduct upon an
incantation of ‘good medical practice.’” Virginia Acad. of Clinical Psychologists v. Blue Shield of
Virginia, 624 F.2d 476, 485 (4th Cir. 1980).