Accountable Care Organizations: Mandatory Antitrust Review Not Required

“When the idea of ACOs was floating around prior to enactment of the Affordable Care Act last March, some groups and commentators argued that antitrust enforcement was likely to deter their formation… But the primary concern was that ACOs would constitute clinically integrated provider-controlled contracting networks and that there was too little and uncertain antitrust guidance explaining the circumstances under which networks are sufficiently clinically integrated so that their joint negotiations of contracts with health plans on behalf of their competing participants would not run afoul of the antitrust law’s per se ban on horizontal price-fixing agreements.” (Health Law Alert: Final ACO Antitrust Enforcement Statement Won’t Deter Procompetitive ACOs by Ober|Kaler) 

Did regulators get antitrust review of Accountable Care Organizations right? Earlier this year, the Federal Trade Commission and the Department of Justice proposed a review process that would have required all ACOs to undergo costly and time-consuming analyses of market shares just to determine if they were subject to antitrust review. The medical community pushed back hard, leading those agencies to issue a final ACO Antitrust Statement that eliminated any notion of mandatory antitrust review, removing a significant barrier to the formation of ACOs. 

“Some 127 persons and groups responded [to the agencies’ request for comments on the proposed rule] and, without question, the most frequent and vehement criticism was the requirement for mandatory antitrust review… The agencies took these criticisms to heart when issuing their final ACO Antitrust Statement on October 20 [with the] deletion of any mandatory antitrust review requirement…  As a result, the agencies have removed one of the major deterrents to ACO formation.” (Health Law Alert: Final ACO Antitrust Enforcement Statement Won’t Deter Procompetitive ACOs

But the story doesn’t stop there. In late November, Federal Trade Commissioner J. Thomas Rosch blasted Accountable Care Organizations because they could end up increasing, rather than reducing, health care costs to consumers. According to Rosch, this is due in large part to the elimination in the final “antitrust Policy Statement [of] mandatory antitrust review at the FTC and DOJ,” which means that “the FTC and DOJ will not be able to block an ACO from participating in the Shared Savings Program.” 

How and when the agencies will respond to Commissioner Rosch’s criticism remains to be seen (if they respond at all). For now, ACOs will have to abide by the rules of the Final ACO Antitrust Statement. For your reference, here’s an overview of the Statement and what it means for Accountable Care Organizations, from health care lawyers on JD Supra:


“The 2010 healthcare reform laws—the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010—established accountable care organizations (ACOs) as the mechanism through which healthcare providers may participate in the federal government’s Shared Savings Program. Because ACOs bring together otherwise independent physicians and hospitals, providers had clamored for the government to issue a position statement about the antitrust implications of such a structure.” (Final Antitrust Policy Statement Regarding ACOs in Medicare Shared Savings Program by Duane Morris LLP) 

Final ACO Antitrust Statement

“The Policy Statement provides that the Agencies will apply rule of reason—and not per se—analysis to an ACO’s joint contracting activities with commercial payors, so long as the ACO meets the U.S. Centers for Medicare & Medicaid Services’ (CMS’) requirements for participation—and participates—in the MSSP, and uses the same governance structures and clinical processes to serve patients in Medicare and commercial markets. The Policy Statement also creates a safety zone providing that the Agencies will not challenge, absent extraordinary circumstances, an ACO comprising independent ACO participants providing a common service that possess a combined share of 30 percent or less of each common service in each participant’s PSA.”  (FTC/DOJ Remove Mandatory Antitrust Review for MSSP-Participating ACOs in Final Policy Statement by McDermott Will & Emery) 

Rule of Reason Analysis

“According to the Antitrust Policy Statement, the agencies will not challenge as per se illegal an ACO that jointly negotiates with private insurers to serve patients in commercial markets if the ACO satisfies certain conditions, including compliance with CMS’s eligibility criteria and use of the same governance and leadership structures and clinical and administrative processes to serve patients in both Medicare and commercial markets. For ACOs that meet applicable criteria, the agencies will apply a “rule of reason” analysis in analyzing a potential antitrust violation. (Medicare Accountable Care Organizations: CMS Announces Final Rule by Ropes & Gray LLP) 

The Antitrust “Safety Zone”

“The policy statement establishes an antitrust ‘safety zone’ for ACOs in the Shared Service Program when market shares of overlapping providers do not exceed 30%. ACOs falling within this safety zone are assured that ‘absent extraordinary circumstances’ the agencies ‘will not challenge’ either their formation or their operation… If an ACO includes hospitals or ASCs, those facilities must be “non-exclusive” to the ACO to fall within the safety zone. This means the facility must retain the ability to contract or affiliate with other payors or ACOs or the safety zone is lost.” (Antitrust Enforcement Agencies Issue Final Guidance on ACOs by Davis Wright Tremaine LLP) 

Going forward

“An FTC/DOJ ACO Working Group will be established to collaborate and discuss issues arising out of the ACO reviews to ensure efficient, cooperative and expeditious reviews. The policy statement also reaffirms the agencies’ commitment to protecting competition in the health care markets, explaining the agencies’ intent to monitor data and other information from CMS to assess the competitive effects of ACOs and guide future enforcement policies.” (No Mandatory Antitrust Review for ACOs by Sheppard Mullin Richter & Hampton LLP) 

Questions Remain

“How will the Agencies apply the Rule of Reason standard to ACOs, and what level of detail will they require from ACOs to establish the existence of efficiencies from integration and the ‘reasonable necessity’ of integration to achieve those efficiencies? The Agencies have historically been skeptical of the need for integration by healthcare professionals, and have brought many antitrust challenges to healthcare collaborations.” (FTC/DOJ Final Policy on Accountable Care Organizations: Important Antitrust Issues Remain Uncertain for Healthcare Collaborations by Morgan Lewis) 


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