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Antitrust Considerations from the Recently Released ACO Proposed Regulations

Posted in Accountable Care Organizations, Antitrust

The Federal Trade Commission and Department of Justice (the “Agencies”) recently released Proposed Statement of Antitrust Enforcement Policy Regarding ACOs, which contains several points of interest:

  1. Rule of Reason Treatment. The Agencies will provide rule of reason treatment to an ACO if, in the commercial market, the ACO uses the same governance and leadership structure and the same clinical and administrative processes as it uses to qualify for and participate in the Shared Savings Program. This is consistent with the FTC’s treatment of joint price agreements among competing health care providers that are either financially or clinically integrated.
  2. The 30 Percent Safety Zone. There will be a formal ACO safety zone where FTC/DoJ will not, absent extraordinary circumstances, worry about an ACO. The brightline rule appears to be that each physician specialty in the ACO must not exceed 30 percent of the relevant geographic market where the ACO participates. A notable difference between the ACO safety zone and the safety zone for physician networks found in the Agencies’ Statements of Antitrust Enforcement Policy in Health Care (“Health Care Statements”) is that the ACO safety zone does not differ based on whether physicians or other providers are exclusive or non-exclusive to the ACO. The market share ceiling is 30 percent, which is the same threshold as for non-exclusive physician networks identified in the Health Care Statements. The Health Care Statements safety zone for exclusive physician networks in 20 percent. Notably, hospitals and ASCs must be non-exclusive to the ACO to qualify for the safety zone. Also notable is the fact that an ACO will not lose its safety zone status if it later exceeds 30 percent market share solely because it attracts more patients.
  3. Exceeding 50 Percent. Specific rules would apply to ACOs with a market share exceeding 50 percent in the PSA for any service, depending on whether the relevant service is provided by a single participant in the ACO or by two or more competing participants. If the ACO includes a participant with a greater than 50 percent share in its PSA of any service that no other ACO participant provides to patients in that PSA, that ACO participant must be non-exclusive to the ACO to fall within the safety zone. Where this applies, the ACO cannot require a commercial payer to contract exclusively with the ACO or otherwise restrict a commercial payer’s ability to contract or deal with other ACOs or provider networks.
  4. Mandatory Anti-trust Review. ACOs that exceed 50 percent market share for any common service that two or more independent ACO participants provide to patients in the same primary service area are subject to mandatory antitrust review. Assuming parties to the ACO provide the information requested by the agencies as outlined in the proposed policy, the antitrust review shall take no longer than 90 days. The ACO cannot participate in the Shared Savings Program without a letter from one of the agencies indicating that the agency has no present intent to challenge or recommend challenging the ACO under the antitrust laws. Mandatory review would not be required where the ACO qualifies for the Rural Exception.
  5. Safety in the 30 to 50 Percent Gray Zone. For ACOs that fall between 30 and 50 percent of the market (i.e., outside the safety zone but not subject to mandatory review), the agencies outline five types of conduct that the ACO should avoid to minimize antitrust concerns. According to the agencies, ACOs that avoid such conduct would be “highly unlikely” to present competitive concerns, and presumably would be unlikely to be investigated by the agencies.