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LiveBlog of FTC Workshop: Another Dose of Competition, Accountable Care Organizations and Antitrust

Posted in Accountable Care Organizations

1:15PM—The workshop concluded a few minutes ago.  Overall, I suspect that most people present or who listened or viewed the webcast would agree that the discussion was helpful and certainly many excellent points were brought forward to the regulators.  Particularly in the second session, the regulators asked many probing questions, a good sign of their deep interest in the topic of ACO development.

As a final point, there was also a running commentary throughout the discussion about the cost of the PSA analysis.  One commenter, David Dranove, in written remarks suggests that the cost would average $20,000 per ACO.  Other commenters were in a similar range for a simple ACO.  However, the meaning, or value, of $15-$20,000 is clearly different depending on your point of view.  Many of the more provider-friendly commenters make the point that for small ACOs of perhaps 250 members, or for new ACO development, adding that level of expense may make the difference between a go and a no-go decision.  And even if that amount of money doesn’t rate that decision point, the regulators are piling on another cost to an organization that has no guarantees of actual savings, and might well owe the government substantial amounts of money.  Yet the payor side of the house makes the point that antitrust analysis is inherently complex and that folks should be accepting of this as a reasonable expense.  Personally, I think that most physician leaders will be unhappy with paying consultants tens of thousands of dollars (and for large complex ACOs clearly the pricetag will be higher than $15-$20,000) for a prescreening process that may make little or no sense because of market realities.


1:00PM—The discussion continues and is getting really granular on a number of specific issues relative to the proposed Agency statements.  The FTC asked how it could use or find proxy data for Medicare for types of services that are not covered by Medicare, such as obstetrical services.  Dr. Sacks made the good point that Medicaid data could provide a very good proxy for such data.

Dr. Sacks then made a really neat point, which is that it takes a team of physicians and caregivers to treat most chronic disease.  As a result, he makes the point that a silo approach to reviewing ACO data on a specialty by specialty basis misses the point.  Rather, it would make more sense to review the physician data in terms of teams.  I like this idea and it is worthy of further exploration.  Why not consider the pre-screen in terms of the ACO’s  “diabetic teams” or “congestive heart failure teams” or asthma teams?  This would be a very different way of considering market share but would likely get much closer to the type of patient care that ACOs will try and confront.


12:40PM—The workshop has restarted after a short break.  A lively discussion is underway regarding the basic advantages and disadvantages of the PSA thresholds.  We’ll have to wait for the actual transcript to see exactly who said what, but many good ideas are being brought forward.  First, the point was made that the concept of a screen isn’t bad.  However, a rigid screen is not appropriate or cost effective in all situations.  Why should the budding ACO have to automatically pay a significant economic consulting cost and undergo a delay when a realistic look at the actual market would show that no real issue exists.  The Agencies, therefore, should be open to a “pre-screen” process, likely something as simple as a meeting, to allow the ACO applicant to make the point that there is no need to do the PSA analysis given the market realities.  There was substantial agreement on this point.  I think this is a wonderful idea, provides good flexibility and allows the nascent ACO the opportunity to make its case to go forward without a formal screen.


11:30AM—The opening comments have concluded.  There were many strong speakers among this later group, making many strong points.  For example, Joe Miller from AHIP suggested, in a very provocative point, that physician practice mergers, which generally because of their small size would never implicate premerger antitrust clearance, should be subject to a similar screening process as the ACO screening process.  It strikes me that this would go beyond the scope of the proposed statements, which are meant to address ACO formation.

Miller also believes that the initial screen should happen at levels below 50% PSA share.  There was spirited discussion and dissention with this view.  Clearly, the mandatory nature of the screen will require providers to expend quite a bit of money and time, and over a regulatory screen in a situation where the Agencies already require non-exclusivity.  There seems to be a real disconnect here in terms of cost/benefit, and Toby Singer of Jones Day and Kristi Braun of Mintz Levin certainly made those points.

Lee Sacks really made the point best through his organization’s actual example, regarding the problems with the PSA analysis.  Sacks points out that greater Chicago has over 30 zip codes.  Advocate has over 3,000 participating physicians.  Thus the amount of work required to factor and determine the PSAs will be very significant for Advocate.   I also have to agree that there should be little need for a formal antitrust “screen” in the circumstance where 50%+ market share, however defined, is required to come with non-exclusivity.  Where is the harm?


10:45AM—The workshop is underway.  After some introductory remarks, each speaker is allowed two minutes for introductory remarks, consistent with past workshops.  Perhaps the most compelling of the early speakers is Mindy Hatton of the AHA.  She strongly feels that the proposed statement does not lower legal and regulatory barriers to forming an ACO or clinically integrated group.  She made the point that AHA has reviewed the 160+ largest markets in the USA and finds that each of the largest hospital systems in those markets, if they desired to create an ACO, would have to seek formal Agency review.  Her point, therefore, is that the 30% safety zone would then be largely illusory.  She also made the significant point that in last Friday’s Congressional Quarterly, three of the largest and most well known integrated systems in the USA suggested that they would not create an ACO.  It seems to me that, if true, this would be a blow to the government’s program.   Certainly Ms. Hatton’s comments provided the strongest criticism of the proposed statement amongst the early speakers.


9:40AM—About 20 minutes before the FTC workshop commences.  I will be live blogging as the workshop is underway to provide some perspective on the commentary that is happening at the workshop.  There is quite a bit of information posted at the FTC website regarding this event, including the agenda, participant bios, and a background powerpoint that covers the ACO process generally, although it does not attempt to get into antitrust issues.

There will be two panels today:  the first panel will last 90 minutes and focus on integration, market power and key policy issues.  Certainly this panel will provide a high level overview of many different participant’s focus on how the proposed joint FTC/DoJ (“Agencies”) statement will impact ACO development in the marketplace.  The second panel, 60 minutes in length, will focus on the role of primary service area (“PSA”) status.  So this second panel should dive in deeper into how the PSA is calculated, when an ACO needs to re-calculate the PSA and impact of PSA percentages on the ACO application process and agency review process.

Some larger issues that have been raised in the past that are worth keeping in mind as we listen in today include:

  • What are the areas that Agency representatives continue to ask for comment on from the public?  Note that there are representatives from both the FTC and DoJ present at today’s workshop.
  • What sort of discussion might there be today of recent antitrust developments?  For example, the FTC’s recent action relating to Providence Health in Spokane in its effort to acquire cardiology practices, and how that might impact the ACO review process.
  • Discussions as to process:  how the Agencies will jointly administer their duties under the ACO program could be very interesting.  Equally interesting would be any discussion of how the Agencies see themselves interacting with CMS.
  • The Agencies might provide some additional illumination on the safeguards described with regard to PSA percentages between 30% and 50%.