The Patient Protection and Affordable Care Act, passed in March 2010, creates several programs that aim to increase healthcare quality and lower costs. One of the most recognizable of these is the Medicare Shared Savings, or accountable care organization, program. The PPACA has been hotly contested, and the constitutionality of the law will be soon decided by the Supreme Court. Despite this uncertainty, many health systems are moving forward with plans to develop ACOs.
ACOs reward providers for coordinating care, reducing costs and increasing quality, and they require providers to collaborate closely to achieve these aims. This type of collaboration is generally prohibited among healthcare providers because it could lead to reduced competition. However, federal regulators have determined an ACO's benefits — such as improved quality and reduced cost — may outweigh this risk, assuming the ACO follows certain guidelines.
In October, HHS released its final rule for ACOs, and the Federal Trade Commission and the Department of Justice filed suit by publishing a final antitrust enforcement policy statement for these organizations. The policy statement provides four key areas of guidance for hospitals, physicians and other ACO participants.
1. The FTC and DOJ plan to apply "rule of reason" when assessing the potential anti-competitiveness of an ACO. In the policy statement, the agencies state they intend to use a rule-of-reason analysis when reviewing any joint price negotiations among competing providers within an ACO. This suggests the agencies plan to weigh any potential anti-competitive outcomes against procompetitive benefits the ACOs create.
According to the policy statement:
"Joint price agreements among competing healthcare providers are evaluated under the rule of reason…if the providers are financially or clinically integrated and the agreement is reasonably necessary to accomplish the procompetitive benefits of the integration."
The agencies explain in the policy statement they purposefully did not include specific criteria required to establish clinical integration, but instead will rely on the Medicare Shared Savings Program's eligibility criteria to determine an appropriate level of integration. That is, if an ACO meets CMS' MSSP eligibility criteria (whether or not it are actually participating in the program), the agencies will treat it as a "bona fide [arrangement] intended to improve the quality, and reduce the costs, of providing medical and other healthcare services through their participants' joint efforts."
Based on the policy language, it appears the agencies will also use a rule-of-reason analysis when reviewing joint negotiations between ACOs enrolled in or eligible for the MSSP and commercial payors, says Angelo Russo, JD, a partner in McGuireWoods' Chicago office. Specifically, the policy states:
"The agencies will treat joint negotiations with private [payors] as reasonably necessary to an ACO's primary purpose of improving healthcare delivery, and will afford rule of reason treatment to an ACO that meets CMS's eligibility requirements for, and participates in, the Shared Savings Program and uses the same governance and leadership structures and clinical and administrative processes it uses in the Shared Savings Program to serve patients in commercial markets."
2. Certain ACOs fall into an antitrust "safety zone." The policy statement establishes a "safety zone" for certain ACOs unlikely to raise significant competitive concerns, and states the agencies will not challenge ACOs that fall within the zone.
"In a nutshell, to fall within the safety zone, independent ACO participants (e.g., each physician group, individual practitioner or hospital) that provides the same service (referred to in the policy as a "common service") must have a combined share of no more than 30 percent of each common service in each participant's primary service area, whenever two or more ACO participants provide that service to patients from the PSA," explains Mr. Russo. Detailed instructions on calculating an ACO's PSA shares are included in the policy statement.
Certain ACOs in rural areas may also fall in the safety zone, even if their PSA shares are above 30 percent, if they meet the "rural exception" outlined in the policy statement.
3. Antitrust review is not mandatory. The final policy statement states that ACOs that fall outside the safety zone may still be competitive and lawful, and it does not include a mandatory antitrust review for these ACOs — something that was required in the draft statement. However, the agencies encourage ACOs to seek review and is offering a 90-day expedited process for those entities before they enroll in CMS' program, explains Richard Greenberg, JD, who is also partner in McGuireWoods' Chicago office.
4. Avoid five behaviors. Finally, the policy statement outlines five behaviors ACOs should avoid as they could raise antitrust concerns. While avoiding these behaviors does not guarantee an ACO won't be challenged, it should reduce the risk of a challenge.
- Improper sharing of competitively sensitive information that could facilitate collusion among ACO participants in the sale of competing services outside the ACO.
- Preventing or discouraging private payors from directing or incentivizing patients to choose certain providers.
- Tying sales of the ACO's services to the private payor's purchase of other services from providers outside the ACO (even if they are affiliated with an ACO participant).
- Exclusively contracting with ACO participants as this could discourage them from contracting with private payors outside the ACO, either individually or through other ACOs.
- Restricting a payor's ability to share cost, quality, efficiency and performance information on providers with enrollees, as this could reduce enrollees' ability to select providers.
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