Federation of American Hospitals Answers 10 Questions on ACOs Posed by Antitrust Enforcers

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The Federation of American Hospitals answered 10 questions posed by the Federal Trade Commission, as the agency ponders how it will handle antitrust enforcement of accountable care organizations, according to a federation letter to the FTC, CMS and the Inspector General of HHS.

Here are the FTC's 10 questions and the federation's answers, both of which are paraphrased except for material in quotes.

Question 1: Should any safe harbor from antitrust laws for Medicare ACOs be extended to dealings with private payors?

Answer: If the ACO uses the same organizational structure in dealings, the safe harbor should be extended to private payors. Most providers do not organize themselves solely around participation in the Medicare program and if they did so, the cost of creating an ACO solely for Medicare may be prohibitive. "The pursuit of one high-level, evidence-based, coordinated care delivery model will help to create consistency in delivery, quality, and processes and avoid unnecessary and costly segmentation," the federation said.

Question 2: How prescriptive do enforcement agencies need to be in establishing requirements beyond what is stated in the law?

Answer: To foster innovation and maintain flexibility, stipulations on ACOs should be kept to a minimum. "Any prescriptions should not tilt the competitive landscape to favor one structure over another." For example, "tax-paying community hospitals with predominantly voluntary medical staffs are disadvantaged in the ability to establish an ACO."

Question 3: Should shared savings paid to ACOs be sufficient enough to incentivize a change in practice patterns?

Answer: Yes. If ACOs meet requirements for clinical coordination, group structure, leadership and management of clinical processes, and data, "there should be ample sharing of financial risk across the group to address concerns with respect to overall integration and to qualify for safe-harbor treatment," FAH stated.

Question 4: Should there be requirements for significant investment in human and financial capital and for selection of participating providers?

Answer: Current requirements for ACOs would "inevitably" require a significant human investment to participate in the ACO. The government does not need to require a minimum capital investment because this "does little to truly measure or promote commitment and participation," the federation said. Current requirements such as evidence-based medicine, data reporting and care coordination will "provide the framework for ensuring a good faith pursuit of the goals."

Question 5: How should issues related to exclusivity and market share be addressed?

Answer: Enforcement agencies should adhere to current practices in dealing with exclusivity and market share. "We do not think a special requirement should supersede the existing framework in this area, particularly where exclusivity has not been proven to be critical in achieving the desired results," the FAH said. There should be "a level playing field between systems which have varying degrees of corporate integration and regional market power."

Question 6: What performance metrics should be used to determine the competitive effects of an ACO in the market?

Answer: the performance metrics should be "familiar and widely used, but not [be] static for purposes of all potential ACO models," then federation stated. An ACO is "ultimately a joint undertaking between a participating group of providers," so metrics should be reviewed "in a manner consistent with other joint undertakings the agencies currently review in the health care markets."

Question 7: What happens if prices rise in the short term, without measurable quality improvements?

Answer: Price increases may occur in the short term, but "if the systems are in place, and they are functional (subject to CMS monitoring), then the safe harbor should continue in its application for the initial period," FAH stated. The safe harbor should be removed only "if it is determined that the required processes are not being operated in good faith" and there is "an appropriate review process."

Question 8: Should there be a minimum size for ACOs in the commercial markets?

Answer: The minimum number of 5,000 Medicare lives is sufficient. Since the law stipulates a minimum size of 5,000 lives on the Medicare side, there is not need to set a minimum on the private payor side.

Question 9: Do certain types of ACOs threaten competition more than others?

Answer: There should be "a level playing field" rather than treating ACOs differently. For example, "it is important to create the flexibility that will allow an independent medical staff membership to participate on a level basis with a hospital-employed physician base, or a tightly affiliated faculty practice plan," FAH stated.

Question 10: Should there be measurable improvement standards and should they vary by type of measure?

Answer: "We discourage setting of mandatory measurable improvement standards," the federation said. "Such standards could stifle the very innovative efforts that the law was designed to incentivize to promote the coordination and efficiency of care delivery." Instead, "the best approach is to adopt a series of goals or targets, based on national quality standards, and based on the required processes for the first phase of implementation."

Additional comment on requiring electronic health record systems.
To be fully effective, an ACO should eventually install an EHR, but "it does not seem appropriate, particularly in this era of scarce resources and economic uncertainty, to impose an EHR requirement for ACOs earlier than Congress has already determined for the remainder of the industry." Congress does not require full EHR implementation until 2015.

Read the FAH letter on ACOs.

Read more coverage on ACOs.

-More Than Half of Healthcare Leaders See Shared Savings as Very Effective Strategy for ACOs

-10 Recommendations on ACO Regulations From Premier's Collaborative

-FTC: What Attributes Does an ACO Need to Have?

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