At the end of March, the Federal Trade Commission and the Department of Justice released a proposed antitrust policy statement for accountable care organizations. While the guidance is directed toward ACOs that participate in the Medicare Shared Savings Program, it also addresses antitrust issues for these ACOs' dealings with commercial insurers.
The guidance states that while there is a potential for antitrust action because of competing providers collaborating to provide coordinated care, collaboration among providers in the ACO may be allowed if the ACO is considered a bona fide arrangement to reduce costs, says Milton Cerny, JD, an attorney with McGuireWood's Washington, D.C., office. http://www.ftc.gov/os/fedreg/2011/03/110331acofrn.pdf
Antitrust agencies have previously allowed joint pricing agreement among competitors in the healthcare sector if the groups are considered clinically integrated and the benefit of integration (i.e., reduced costs and improved efficiencies) outweighs any anticompetitive effects. The agencies take a similar stance here, saying they anticipate participants accepted into the MSSP to meet indicators of clinical integration. Further, the agencies will apply the "rule of reason" to weigh anti-competitive efforts against precompetitive efforts that result in cost savings and quality improvements, says Mr. Cerny.
Antitrust safety zone
The guidance establishes an antitrust safety zone for ACOs in which two or more ACO participants providing the same service make up 30 percent or less of the market. The safety zone does not differ based on whether providers or exclusive or non-exclusive to the ACO, unless the ACO meets a rural exception that allows the ACO to include one provider per specialty in rural areas, even if including that provider moves the ACO's market share above 30 percent. ACOs falling in the safety zone will not be challenged by antitrust agencies, according to the guidance.
If an ACO, does not meet the safety zone, it does not mean the arrangement is per se illegal, says Mr. Cerny. Instead, ACOs with 30-50 percent of the market may request a review by the antitrust agencies, but according to the regulations, will be free from scrutiny as long as they do not impede competition and engage in pro-competitive behavior. ACOs with 50 percent or more of the market must undergo review by the FTC and DOJ, but could be approved if they meet the rule of reason.
5 types of conduct to avoid
Any ACO, regardless of the safety zone category it falls in to, should avoid the following five behaviors that draw antitrust scrutiny, says Mr. Cerny.
1. Preventing or discouraging commercial payors from directing patients to choose certain providers, even if they fall outside the ACO.
2. Tying sales (either explicitly or implicitly through pricing policies) of the ACO's services to the commercial payor's purchase of other services from providers outside the ACO.
3. Contracting with ACO physician specialists, hospitals, ASCs or other providers on an exclusive basis. Contracts with primary care physicians, however, can be exclusive.
4. Restricting a commercial payor's ability to make available cost, quality, efficiency and performance information to its enrollees.
5. Sharing pricing data among ACO participants that could be used to set prices outside the ACO.
Unanswered questions
While the FTC and DOJ's guidance provides some important information to ACO providers, it does leave some antitrust concerns unanswered, says Mr. Cerny.
Specifically:
The FTC and DOJ are accepting comment on the proposed statement until May 31, 2010.
Read the Proposed Statement of Antitrust Enforcement Regarding Accountable Care Organizations Participating in the MSSP (pdf).
The guidance states that while there is a potential for antitrust action because of competing providers collaborating to provide coordinated care, collaboration among providers in the ACO may be allowed if the ACO is considered a bona fide arrangement to reduce costs, says Milton Cerny, JD, an attorney with McGuireWood's Washington, D.C., office. http://www.ftc.gov/os/fedreg/2011/03/110331acofrn.pdf
Antitrust agencies have previously allowed joint pricing agreement among competitors in the healthcare sector if the groups are considered clinically integrated and the benefit of integration (i.e., reduced costs and improved efficiencies) outweighs any anticompetitive effects. The agencies take a similar stance here, saying they anticipate participants accepted into the MSSP to meet indicators of clinical integration. Further, the agencies will apply the "rule of reason" to weigh anti-competitive efforts against precompetitive efforts that result in cost savings and quality improvements, says Mr. Cerny.
Antitrust safety zone
The guidance establishes an antitrust safety zone for ACOs in which two or more ACO participants providing the same service make up 30 percent or less of the market. The safety zone does not differ based on whether providers or exclusive or non-exclusive to the ACO, unless the ACO meets a rural exception that allows the ACO to include one provider per specialty in rural areas, even if including that provider moves the ACO's market share above 30 percent. ACOs falling in the safety zone will not be challenged by antitrust agencies, according to the guidance.
If an ACO, does not meet the safety zone, it does not mean the arrangement is per se illegal, says Mr. Cerny. Instead, ACOs with 30-50 percent of the market may request a review by the antitrust agencies, but according to the regulations, will be free from scrutiny as long as they do not impede competition and engage in pro-competitive behavior. ACOs with 50 percent or more of the market must undergo review by the FTC and DOJ, but could be approved if they meet the rule of reason.
5 types of conduct to avoid
Any ACO, regardless of the safety zone category it falls in to, should avoid the following five behaviors that draw antitrust scrutiny, says Mr. Cerny.
1. Preventing or discouraging commercial payors from directing patients to choose certain providers, even if they fall outside the ACO.
2. Tying sales (either explicitly or implicitly through pricing policies) of the ACO's services to the commercial payor's purchase of other services from providers outside the ACO.
3. Contracting with ACO physician specialists, hospitals, ASCs or other providers on an exclusive basis. Contracts with primary care physicians, however, can be exclusive.
4. Restricting a commercial payor's ability to make available cost, quality, efficiency and performance information to its enrollees.
5. Sharing pricing data among ACO participants that could be used to set prices outside the ACO.
Unanswered questions
While the FTC and DOJ's guidance provides some important information to ACO providers, it does leave some antitrust concerns unanswered, says Mr. Cerny.
Specifically:
- The guidance only applies to ACOs formed after March 23, 2010. A number of entities formed before this date are expected to operate as ACOs, and no guidance has been offered to these groups. They will have to await further agency guidance.
- While the guidance applies agreements ACOs in the MSSP have with commercial payors, it does not specifically apply to ACOs that don't participate in the MSSP. If an ACO chooses to only contract with commercial payors, how will the FTC and DOJ evaluate it? Additionally, if an ACO is dropped from the MSSP program, will it lose safety zone protections?
- Finally, the guidance creates problems for "virtual" and loosely affiliated networks of providers, because these providers may not have the requisite legal control needed to assure antitrust-related requirements are met.
The FTC and DOJ are accepting comment on the proposed statement until May 31, 2010.
Read the Proposed Statement of Antitrust Enforcement Regarding Accountable Care Organizations Participating in the MSSP (pdf).