Do ACOs violate antitrust laws?

Despite growing concerns about their legality, most accountable care organizations (ACOs) will not violate antitrust laws, said Gail Kursh, JD, deputy chief of the legal policy section of the antitrust division of the Department of Justice at Monday's Second National Accountable Care Organization Summit in Washington, DC.

The antitrust laws are not meant to prevent ACOs from forming, but rather they are meant to prevent the removal of competition that could result in market power and price fixing, Kursh said.

Under current rules to participate in the Medicare Shared Savings Program, would-be ACO participants that enter into an ACO collaboration that have a share of 50 percent or more of a primary service area (PSA) would need to pass through an initial filtering process by the antitrust agencies. At that point, the organization (or provider) must provide data that a 50 percent share does not create market power or anticompetitive behavior.

An ACO will be considered legitimate if it is a clinically integrated collaboration of otherwise independent providers and not a vehicle for competitors simply to raise prices, Kursh said. However, what constitutes a clinically integrated collaboration remains to be figured out. To participate in shared savings, ACOs would need a favorable letter from the antitrust agencies.

Most ACOs, however, are highly unlikely to raise market concerns, according to Kursh. "[The antitrust agencies] recognize that ACOs do have potential to improve care, but it's essential that ACOs don't eliminate competition that will raise prices or reduce choices for patients," she said.

In April, the Federal Trade Commission and the Department of Justice released a statement, timed to coincide with the proposed ACO rules from the Centers for Medicare & Medicaid (CMS). Since then, the antitrust agencies have received more than 100 comments, including those from the American Hospital Association (AHA).

Regarding consolidation, AHA Senior Vice President and General Counsel Melinda Hatton, MPA, JD, said that consolidation doesn't necessarily have to be taboo. In 2009, there were 704 more hospitals affiliated with health systems than in 2000, she said. And in 2010, there were 522 critical access hospitals affiliated with systems, up from 65 hospitals in 2000. Hatton pointed out that not all hospital affiliations occur within the same region and not all consolidations result in market power.

"I hope that market power will not dominate the ACO discussion," Hatton said. "Managed care requires care coordination," she said.

Market power may be a result of mergers, but it might also produce more efficiency, said Arthur Lerner, JD, partner at Crowell & Moring, LLP. Consolidation could be a good thing, but market power concerns might also be relevant, he said.

For more:
- read the FTC-DOJ statement (.pdf)
- read the full CMS proposed ACO rules (.pdf)

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