8 Points on How Antitrust Laws Might Affect ACOs

Douglas A. Hastings, chairman of the board of EpsteinBeckerGreen in Washington, D.C., makes eight points on how federal antitrust laws could affect accountable care organizations.

1. ACOs raise antitrust issues. An ACO could include competing providers sharing pricing information with each other. Sharing pricing information could be viewed as "per se" illegal under Section One of the Sherman Act. However, the Federal Trade Commission and the Department of Justice are expected to clear some regulatory ground for ACOs.

2. There is no 'bright line' to guide providers. Hospitals and other providers prefer clear, unambiguous guidance that their ACO arrangements wouldn’t be challenged by the two federal agencies, but federal antitrust laws defy easy answers. For example, while there are measurement scales for market power, "there is no bright line" to show where providers might have too much market power, Mr. Hastings says. "Antitrust agencies generally make determinations on a case-by-case basis," he says.  

3. Antitrust agencies want to provide direction.
However, FTC and DOJ officials want to help providers with ACOs because they understand the goals of this new arrangement. "If the promise of accountable care is realized, purchasers, providers and consumers all will benefit," Mr. Hastings says. In October, the two agencies joined CMS in co-hosting a listening session on ACOs with stakeholders. "It is encouraging that the FTC and DOJ are actively in dialogue with CMS about ACOs," he says.

4. Expect some agency pronouncements. The antitrust agencies have the option of setting up new "market power" safe harbor for ACOs, but more likely they could provide recognition of allowable ACO activities.

5. Existing guidance could be basis for further direction. Mr. Hastings believes a 1996 joint FTC-DOJ guidance on clinical integration is a good starting point for dealing with ACOs. The guidance offered some protections for healthcare providers that are clinically integrated, which is similar to what ACOs are doing. The guidance stated that if competing providers were clinically integrated, they would not be reviewed for a "per se" violation, which involves price fixing. Rather, they would be reviewed on a "rule of reason" basis, which examines whether they would unreasonably restrain trade.

6. FTC/DOJ might recognize CMS designation. "The clinical integration guidance may need to be updated to better address antitrust issues in the ACO context," Mr. Hastings says. For example, the FTC and DOJ might decide that CMS' designation of Medicare ACO status is evidence the arrangement is committed to clinical integration and reducing costs, rather than creating an unlawful combination to raise prices.  

7. Large entities could be barred from collaboration. Antitrust agencies may well object to two dominant systems in a market joining together in one ACO. "Some size and scale is necessary for effective care coordination and quality reporting," Mr. Hastings says, "but aggregation does not equal accountability." Under the "rule of reason," antitrust agencies would still examine market power of organizations partnering in an ACO. On the other hand, two competing hospitals with minimal market share might well withstand scrutiny.

8. Some possibilities for large partners. While federal agencies might not allow full-blown partnerships between dominant players, they might allow them limited kinds of collaborations that promise quality improvements that outweigh the potential for reduced competition. For example, the FTC might allow two large organizations to come together for a specific activity, such as managing diabetes.  

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