In response to the emergence of accountable care organizations (ACOs) under the Patient Protection and Affordable Care Act (PPACA), the Federal Trade Commission (FTC), the Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General (OIG) recently held a workshop on the challenges for shared savings programs posed by the antitrust, civil monetary penalties, anti-kickback and Stark laws. During the day-long colloquium, agency officials solicited feedback and listened to industry concerns on potential barriers to ACO-type arrangements under the current regulatory framework.
PPACA provides for voluntary, comprehensive ACO pilot projects that reward physician groups working with hospitals and other healthcare providers that deliver high-quality, low-cost care over a sustained period. Under the new law, incentive payments will be made to ACOs that exceed performance targets. During the months of intense lobbying preceding the enactment of PPACA, Americans were inundated about the need to bend the cost curve. Translated, it meant that the healthcare dollar would need to go further. Many think ACOs, which promise to eliminate many of the inefficiencies associated with the current silo-based system for delivering healthcare, will bend the cost curve and beneficially transform the provision of healthcare.
In a welcome development, Chairman Jon Leibowitz announced at the workshop that the FTC will develop regulatory safe harbors for ACOs and offer an expedited review of arrangements that do not fit within the safe harbors. This is a very important point, because experience has shown that antitrust safe harbors, understandably, are narrowly drafted and not always conducive to a healthcare system with a wide variety of organizational structures.
The FTC held two panel discussions. One, focusing on clinical integration and when entities participating in an ACO are deemed adequately integrated so that their price negotiations are analyzed under the rule of reason standard (as opposed to being per se illegal), had a great debate around the importance of electronic health record systems to clinical integration. The panel discussed whether ACOs meeting the CMS criteria for participation in Medicare should automatically be deemed sufficiently integrated to be analyzed under the rule of reason. There certainly is logic to this approach, although it may not be sufficiently broad given an anticipated rapid evolution of delivery models in the commercial insurance market.
The second panel addressed issues of market power, over-inclusiveness and exclusivity, and considered whether the FTC should adopt a market share safety zone for ACOs similar to those contained in the FTC Policy Statements. Certainly, market share will present challenges to the FTC as it is widely espoused that ACOs must be of sufficient scale to deliver care, make necessary investments and, where applicable, spread risk. The panel likewise addressed the issue of provider exclusivity. To date, several advisory opinions have praised non-exclusivity of networks. However, many believe that if providers participate in multiple networks, the potential of ACOs will be limited.
The workshop also debated the merits of using HHS's waiver authority vs. creating new exceptions and safe harbors to existing fraud and abuse laws. To that end, several participants sought to revitalize the never-completed Stark exception for incentive payments and shared savings programs. This, of course, would be a welcome development.
The agencies used the workshop to present their preliminary thoughts and proposals for facilitating the growth of shared savings programs as contemplated under PPACA. Their focus was on soliciting input from the healthcare industry and listening to their comments. In response, the provider community emphasized that the current regulatory framework does not account for evolving models of healthcare delivery.
Providers clearly are anxious to pursue collaborative delivery systems outside of the full employment model. However, as discussed by the panels, the regulatory guidance cannot be so rigid that it stifles integration or favors certain delivery models over others, creating winners and losers. As regulations and solutions are proposed over the next several months, we will provide you with analysis and context for these ever-important issues.