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FTC and DOJ Proposed Statement of Antritrust Enforcement for ACOs

Provided by:  Jennifer Kirschenbaum, Esq.

April 4, 2011

Overview of the FTC and Antitrust Division of the DOJ’s Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program

For brevity’s sake, the aforementioned policy will be referred to herein as the “Antitrust ACO Policy”.

The Antitrust ACO Policy disseminated on March 31, 2011 sets forth those considerations the FTC and DOJ (the “Agencies”) will consider when determining whether an accountable care organization is organized in a way that may “reduce competition and harm consumers through higher prices or lower quality of care,” and therefore, be operating in an anti-competitive manner.

On page 5, the Antitrust ACO Policy states what many have been waiting to hear, that those ACOs formed in accordance with CMS’s proposed eligibility criteria, including “(1) a formal legal structure that allows the ACO to receive and distribute payments for shared savings; (2) a leadership and management structure that includes clinical and administrative processes; (3) processes to promote evidence-based medicine and patient engagement; (4) reporting on quality and cost measures; and (5) coordinated care for beneficiaries”, “are reasonably likely to be bona fide arrangements intended to improve the quality, and reduce the costs, of providing medical and other health care services through their participants’ joint efforts.” Further, the Agencies have indicated that such arrangements will pass scrutiny whether operating solely under CMS or providing essentially the same services in the commercial market.

For those physicians looking to form or join ACOs now, knowing a CMS approved ACO will pass muster under an anti-trust review doesn’t do you much good, as ACOs are not receiving CMS approved status yet. Acknowledging this fact, the Agencies provide additional tips from the anti-trust perspective of what may be considered anti-competitive. Specifically, practitioners organized in an ACO that have cornered more than 30% of an individual service in a designated market, may be at risk of anti-competitive behavior. And, in fact, if an ACO is providing more than 50% of an available service in a designated area, there is a presumption of anti-competitive behavior and that ACO must submit for a mandatory review by the Agencies.

So, how do you determine your market share? The Agencies have set forth a formula that requires ACO participants to identify common services germane to their specialty, and the area where they draw at least 75% of their patient population from, and calculate their share of Medicare fee-for service payments from data that will be promulgated by CMS for each common service, by zip-code.

For those ACOs that are just not sure if they set off red flags, the Agencies have provided a bit of advice –

"ACOs that are outside the safety zone and below the 50 percent mandatory review threshold frequently may be precompetitive. The key issue is whether the ACO, on balance, will provide consumers with high-quality, cost-effective health care, or instead, increase price and reduce consumer choice and value. An ACO in this category that does not impede the functioning of a competitive market and that engages in precompetitive activities will not raise competitive concerns and may proceed without Agency scrutiny. As is current practice, however, if it appears that an ACO’s formation or conduct may be anticompetitive, one of the Agencies may investigate the ACO and, if appropriate, take enforcement action at any time during the ACO’s participation in the Shared Savings Program." See page 10.

As many of you reading this are in the downstate New York region, in all likelihood the ACOs you may find yourself participating in should pass anti-trust scrutiny as downstate is not facing a physician shortage at the moment - which is. of course, subject to change given the recent defeat of malpractice reform. However, in an atmosphere that continues to approve United Healthcare acquisitions; it would be difficult to imagine a scenario where the Agencies would take action against physicians in an attempted bona fide ACO structure.

 

For additional information on this topic, contact Jennifer Kirschenbaum at (516)-747-6700 ext. 302 or at Jennifer@Kirschenbaumesq.com.

 

Copyright © 2011 by Kirschenbaum & Kirschenbaum, P.C.
All Rights Reserved. This email is provided for news and information purposes only and does not constitute legal advice or an invitation to an attorney-client relationship. While every effort has been made to ensure the accuracy of the information contained herein, Kirschenbaum & Kirschenbaum PC does not guarantee such accuracy and cannot be held liable for any errors in, any reliance upon this, or losses caused by the information. Under New York’s Code of Professional Responsibility, this material may constitute attorney advertising. Prior results do not guarantee a similar outcome.


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