With ACOs, there's a thin line between collaboration and monopoly

Karen Cheung

 Karen M. Cheung

If providers think they are getting mixed messages from regulatory agencies, that's because they probably are. On one hand, the healthcare reform law requires collaboration across the healthcare continuum, including accountable care organizations. On the other hand, anti-trust agencies warn providers not to collaborate too much, as to keep competition open in the market.

Although collaborative arrangements could have quality and cost benefits, the fear is that partnerships can lead to higher prices. For example, if a provider-health plan merger dominates an area, what's stopping a potential monopoly from fixing prices?

In October 2011, the Federal Trade Commission and the U.S. Department of Justice issued an antitrust enforcement policy, stating they wouldn't challenge as per se illegal a Shared Savings Program ACO that jointly negotiates with private insurers to serve patients in commercial markets, as long as the ACO satisfies certain conditions. But they would still enforce antitrust laws.

A month later, FTC Commissioner J. Thomas Rosch publicly lashed ACOs, arguing that ACOs would increase costs and reduce quality with the threat of market dominance, particularly with regard to private payers.

It seems providers and payers are facing a damned-if-you-do, damned-if-you-don't scenario with a fine line between collaboration and monopoly. Some industry experts say the guidance is vague, lacking or contradictory to the healthcare reform.

Just this week, for example, American Hospital Association Senior Vice President and General Counsel Melinda Reid Hatton said, "[I]f the providers who are charged with building a new kind of healthcare continuum are concerned about the lack of adequate antitrust guidance and flexibility, the federal antitrust agencies should do their part by responding to those pressing concerns," according to an AHA News Now brief.

At the behest of Congress, the Government Accountability Office looked at how federal antitrust guidance could affect healthcare provider collaboration and therefore healthcare quality. The GAO report, released Monday, found that stakeholders are divided on whether the rules are adequate and whether the regulatory agencies are interfering with collaborative care models.

Five of the six experts and one of the four industry groups said agency guidance was sufficient, while one expert and two industry groups asserted that agency guidance on clinical integration wasn't, according to the report summary. They also differed on whether they thought the agencies should permit greater use of exclusive collaborative arrangements to restrict providers' abilities to contract with other arrangements or health plans.

It seems, though, that at least on the hospital side, there are question marks around the healthcare law versus other laws.

OSF Healthcare CEO of OSF Ambulatory Services Bob Sehring last week in a FierceHealthcare exclusive interview talked about the abandoned merger between OSF Healthcare and Rockford (Ill.) Health System.

"Unfortunately, the FTC and the U.S. Justice Department, they don't appear as convinced that is an appropriate avenue to go down," he said.

In a win for the regulatory agency, OSF Healthcare and Rockford called off the deal when the FTC managed to block it, opting to forgo the merger rather endure the lengthy--not to mention, costly--battle.

The government agencies don't share the same views on collaborative care, Sehring noted.

"The FTC is viewing that more as a negative impact on competition. We view it as critical to produce results of better care and reduced costs (which is just what the FTC is looking for) for the community of Rockford," he told us. "We are on clearly different pages. But I would also suggest the FTC and other parts of the administration are on different pages."

As the FTC, DoJ and CMS sort out their pages and the boundary lines, providers and payers likely will move forward in collaborative care, inside or outside of the Shared Savings programs. They'll continue to charge ahead, at a minimum, just to stay competitive in the market. - Karen (@FierceHealth)

Related Articles:
No mandatory antitrust review for ACOs
FTC Commissioner blasts ACOs
Providers ask CMS to leave ACO waivers open
Fierce Q&A: ACO results are worth the challenges at OSF Healthcare