On October 20, 2011, the Federal Trade Commission (FTC) and Department of Justice (DOJ) issued a final Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations (ACOs) Participating in the Medicare Shared Saving Program (MSSP). The final statement is similar to the proposed statement the agencies issued on March 31, 2011, but there are some key differences. This article discusses the key differences and some additional clarification by the agencies.
Proposed Statement
The proposed statement included the following features:
For further discussion of the proposed statement, click here.
Final Statement
The final statement is similar to the proposed statement, but with two key differences:
Rule of Reason Analysis Still Applies
The agencies will continue to apply “rule of reason” analysis to a Participating ACO because the agencies recognize that organizations meeting the MSSP eligibility requirements are likely to be bona fide arrangements intended to improve healthcare quality and costs through collaboration. Under rule of reason analysis, anti-competitive effects of collective negotiations are weighed against pro-competitive efficiencies that result from concerted activities among provider network members (e.g., cost savings and quality improvement). This is critical because, outside of rule of reason analysis, collaborations of otherwise independent providers, such as collective negotiations and fee agreements, are per se illegal under the antitrust laws.
The agencies further state that they will also treat joint negotiations with commercial payers under rule of reason analysis, so long as the same governance and leadership structures and clinical and administrative processes used in the MSSP are used to serve patients in commercial markets.
Safety Zone Still Available
The agencies have finalized the antitrust "safety zone" for Participating ACOs with a combined share of 30% or less of any common service among two or more ACO participants (e.g., physician groups) within a PSA. The agencies will not challenge ACOs in the safety zone, absent extraordinary circumstances.
The agencies will apply the CMS definition of PSA: the lowest number of contiguous postal zip codes from which the ACO participant draws at least 75% of its patients for that service. For physician services, a "common service" is determined by the primary specialty designated for Medicare enrollment purposes. The PSA for outpatient facilities is determined by CMS-defined outpatient categories. The PSA for inpatient hospitals is determined by Major Diagnostic Category (MDC). In addition, each inpatient hospital will have a separate PSA for its inpatient services, outpatient services, and physician services provided by its physician employees, if any.
Depending on the situation, if an ACO participant is exclusive to the ACO (i.e., not permitted to contract with payors through other entities), the safety zone may not be available.
Conduct to Avoid Outside the Safety Zone
An ACO outside the safety zone is not per se illegal, but, as the PSA share for any common service increases, so does the risk of antitrust action. The agencies identify five types of conduct to avoid to reduce the likelihood of antitrust enforcement action:
Voluntary Expedited Review for “Newly Formed” ACOs
There is no mandatory antitrust review provision. However, the final statement establishes that newly formed ACOs—those that, as of March 23, 2010, had not yet signed or jointly negotiated any contracts with commercial payors and have not yet participated in the MSSP—can request a 90-day antitrust review by the agencies.
After the review, the agencies will advise the ACO of whether its formation or operation raises competitive concerns and if so may condition approval on a written agreement with the agencies specifying steps to remedy those concerns. Both the request for review and the agencies’ response will be made public.
Even though there is no mandatory antitrust review, the agencies and CMS made clear that they will actively monitor ACOs through data provided by CMS, and may investigate and take enforcement action against an ACO at any time, even after a review has been obtained.
Limitations of the Final Statement
Despite this statement, traditional antitrust analysis of provider networks remains relevant for developing ACOs. The final statement clarifies antitrust treatment of ACOs and creates some flexibility; however, it affords the most favorable treatment only to Participating ACOs. Antitrust actions are still a viable threat for any ACO contracting with commercial payors because:
Under these circumstances, an ACO may need to rely upon some basis other than the statement to avoid antitrust actions. This will be especially challenging for "loosely affiliated" or "virtual" provider networks that are not single-entity ACOs.
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