The Federal Trade Commission and Department of Justice today issued the final version of a joint policy statement detailing how the agencies will enforce U.S. antitrust laws with respect to new Accountable Care Organizations (ACOs). An ACO is an organization of health care providers that jointly offer services to reduce costs and improve the quality of patient care. Under the Affordable Care Act, ACOs will serve Medicare fee-for-service beneficiaries under the Medicare Shared Savings Program.
Some ACOs may operate in the commercial market as well as in the Medicare program. While ACOs may allow health care providers to innovate and improve care for both Medicare and commercially insured patients, under certain conditions ACOs could reduce competition and harm consumers through higher prices or lower quality care. Today’s guidance will help health care providers form procompetitive ACOs that benefit both Medicare beneficiaries and patients with private health insurance, while protecting health care consumers from higher prices and lower quality.
The Centers for Medicare and Medicaid Services (CMS) will also provide the agencies with data and information to help the agencies assess the competitive effects of all ACOs. The agencies will use this data and information, together with their traditional enforcement tools, to evaluate competitive concerns about an ACO’s formation or conduct and will take whatever enforcement action may be appropriate.
The FTC and DOJ will continue to enforce vigorously the antitrust laws, consistent with the Policy Statement and with the goals of this innovative program to protect health care consumers from higher prices and lower quality care.
As proposed in a draft policy statement issued for public comment in March 2011, the agencies will not challenge as per se illegal a Shared Savings Program ACO that jointly negotiates with private insurers to serve patients in commercial markets if the ACO satisfies certain conditions. The ACO must comply with CMS’s eligibility criteria and use the same governance and leadership structures and clinical and administrative processes to serve patients in both Medicare and commercial markets. For ACOs that meet those criteria, the agencies will apply a “rule of reason” analysis in analyzing a potential antitrust violation.
The final Policy Statement also preserves an antitrust “safety zone” for certain ACOs, as described in the earlier proposed policy statement. With some exceptions, safety zone eligibility is based on the combined Primary Service Area (PSA) shares of ACO participants that provide a common service (e.g., the same physician specialty or the same inpatient service) to patients from the same PSA. To fall within the safety zone, an ACO’s independent participants that provide a common service must have a combined share of 30 percent or less of each common service in each participant’s PSA, where two or more participants provide that service to patients in that PSA.
The Policy Statement provides examples of conduct that, under certain circumstances, may raise competitive concerns. All ACOs should refrain from, and implement safeguards against, conduct that may facilitate collusion among ACO participants in the sale of competing services outside of the ACO. Further, for ACOs that may have market power, the Policy Statement identifies additional conduct that, depending on the circumstances, may prevent private insurers from obtaining lower prices and better quality services for their enrollees.
The FTC and DOJ will offer voluntary expedited 90-day reviews for newly formed ACOs that are seeking additional antitrust guidance. The final Policy Statement includes detailed instructions for any newly formed ACO that wishes to take advantage of the voluntary expedited antitrust review process.
The final Policy Statement incorporates public input and differs from the original proposal in two significant respects:
The agencies have made other minor modifications to the Policy Statement in response to feedback received during the public comment period.
The Commission vote approving the final Policy Statement and related Federal Register notice was 4-0. It can be found here and as a link to this press release on the FTC’s website
The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to email@example.com, or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook and follow us on Twitter.