On October 20, the Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ) issued their final “Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program” (the Final Statement), in conjunction with the publication by the Centers for Medicare and Medicaid Services (CMS) of the final rule under Section 3022 of the Affordable Care Act.1 The Medicare Shared Savings Program (MSSP), established under the Affordable Care Act, seeks to improve the quality and reduce the cost of health care services by providing incentives in the form of shared savings to providers that form integrated health care delivery systems. These integrated delivery systems, known as Accountable Care Organizations (ACOs), assume responsibility for a patient population of Medicare fee-for-service beneficiaries. Following the Agencies’ March publication of a Proposed Statement of Antitrust Enforcement Policy2 and 60-day public comment period,3 the Final Statement clarifies the antitrust analysis the Agencies will apply to ACOs participating in the MSSP and embraces many familiar concepts the Agencies have applied to evaluate clinically integrated arrangements for years.

The Final Statement maintains the Proposed Statement’s 30 percent antitrust safety zone but differs in two significant ways. First, the Final Statement applies to all collaborations among health care providers and provider groups that intend or have been approved to participate in the MSSP, not just those collaborations formed after March 23, 2010, the date the Affordable Care Act was enacted. Second, because the CMS final rule no longer requires that ACOs with a greater than 50 percent share of any common service undergo a mandatory antitrust review as a condition of entry into the MSSP,4 the Final Statement no longer includes provisions related to mandatory antitrust review.

While the Final Statement promises that the Agencies, aided by aggregate claims data for all MSSP ACOs collected by CMS, will continue to protect competition in markets served by ACOs and will monitor vigilantly complaints about ACOs’ formation and conduct, it confirms that when evaluating whether a particular ACO collaboration poses competitive concerns, the Agencies will apply a Rule of Reason analysis to ACOs that (1) meet CMS eligibility criteria for, and participate in, the MSSP, and (2) use the same governance and leadership structures and clinical and administrative processes in the MSSP as in commercial markets. The stated justification for the Rule of Reason analysis is the Agencies’ determination that the CMS eligibility criteria are broadly consistent with indicia of bona fide clinical integration intended to improve quality and reduce cost, and that the collection and evaluation by CMS of cost, utilization and quality metrics, will enable the Agencies to determine whether clinical integration sufficient to improve quality and reduce costs has been achieved.

The Final Statement retains the proposed antitrust safety zone for eligible ACOs the Agencies deem “highly unlikely to raise significant competitive concerns” – those ACOs in which for any common service5 provided by two or more ACO participants, all ACO participants have a combined market share of 30 percent or less in each participant’s Primary Service Area, or PSA.6 To fall with this safety zone, any participating hospitals and ambulatory surgery centers must be non-exclusive to the ACO.

The Final Statement recognizes two exceptions that allow ACOs that exceed the 30 percent share to remain within the safety zone: a Rural Exception and a Dominant Provider Limitation. Under the Rural Exception, an ACO may include on a non-exclusive basis one physician or physician group practice per specialty for each county in a rural geographic area, or a Rural Hospital (as defined by the Final Statement), even if that inclusion causes the ACO’s share of any common service to exceed 30 percent. The Dominant Participant Limitation permits the inclusion in an ACO of a participant that has a greater than 50 percent share in its PSA of a service that no other participant provides, so long as the dominant provider participates in the ACO on a non-exclusive basis. In a dominant provider situation, the ACO may not “require a private payer to contract exclusively with the ACO or otherwise restrict the payer’s ability to contract with other ACOs or provider networks.”

The Final Statement also recognizes that ACOs outside the antitrust safety zone may be procompetitive and lawful, and provides guidance on what conduct may cause competitive concerns. It provides four enumerated actions that ACOs with high PSA shares or other indicia of market power should avoid to reduce antitrust risk: (1) prohibiting or discouraging commercial payers from “directing or incentivizing” patients from choosing certain providers; (2) tying the sale of services provided by the ACO to the private payer’s purchase of services from providers outside the ACO; (3) contracting with ACO physicians, hospitals, ASCs, or other providers (but not physician practices) on an exclusive basis; and (4) restricting a commercial payer’s ability to provide performance data and information to its enrollees. In addition, the Final Statement cautions that all ACOs, regardless of their market share, should implement firewalls and other appropriate safeguards to prevent exchanges of information about price or other competitively sensitive information that could facilitate collusion among ACO participants in sales of services outside the ACO.

Finally, the Final Statement allows newly formed ACOs, those that had not yet signed or jointly negotiated contracts with private payers before March 23, 2010, to seek an expedited, 90-day voluntary antitrust review from the Agencies.