On October 20, 2011, the Federal Trade Commission and the Antitrust Division of the Department of Justice issued their final Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (Policy Statement). The Policy Statement is aimed at providing antitrust guidance for ACOs that intend to engage in joint contracting with private payors. The Policy Statement, while helpful, reflects the antitrust enforcement authorities' continued ambivalence regarding joint contracting by ACOs and the clinical integration exception to the general rule prohibiting joint contracting by independent providers. While helpful, the guidance provided will make it difficult for some providers participating in an ACO to feel secure from antitrust risk.

Rule of Reason Scrutiny

At its heart, the Policy Statement does recognize the potential benefits ACOs can provide for consumers. It states that the antitrust agencies “will treat joint negotiations with private payers as reasonably necessary to an ACO's primary purpose of improving health care delivery, and will afford rule of reason treatment to an ACO that meets CMS's eligibility requirements for, and participates in, the Shared Savings Program.” The agencies essentially view participation in the Shared Savings Program as a proxy for achieving true clinical integration. Thus, providers who participate in qualified ACOs can take some comfort in the fact that additional joint contracting by the ACO with private payors will not result in per se condemnation by the agencies.

Safety Zone

The final Policy Statement goes further and creates a safety zone for ACOs for which participating providers have a market share of less than 30 percent of each common service, in each participant's Primary Service Area (PSA). A common service is defined as a service that two or more ACO participants provide. The PSA is the lowest number of contiguous postal zip codes from which the ACO participants draw at least 75 percent of their patients. To be in the safety zone, any hospitals or ambulatory surgery centers have to be non-exclusive to the ACO. The agencies have made it clear that they will not challenge an ACO that falls within the safety zone, absent extraordinary circumstances like collateral collusion.

The Policy Statement also provides a “rural exception” safety zone that can apply even when market shares exceed 30 percent. There also is a Dominant Participant Limitation, which applies to any ACO with a participant with a greater than 50-percent market share in its PSA, and which, among other things, requires that participant to be non-exclusive to the ACO.

Outside the Safety Zone

There are no bright lines for ACOs that fall outside the safety zone. The agencies do recognize that ACOs for which participants have higher market shares may be procompetitive and lawful. No assurances are given, however, and the agencies will undoubtedly scrutinize these arrangements carefully to assess their impact in their respective markets.

The Policy Statement describes certain conduct that will raise anti-competitive concerns and will make it more likely that private joint contracting will be found violative of the antitrust laws. Referenced conduct to avoid includes the following:

  • Improper sharing of competitively sensitive information
  • For ACOs with high market share:
    • Preventing or discouraging private payors from directing or incentivizing patients to choose certain providers through anti-steering, anti-tiering, or most-favored-nations provisions
    • Tying sales of the ACOs services to the purchase of other services
    • Exclusive contracting with ACO providers
    • Restricting a private payer's ability to make available to its enrollees cost, quality, efficiency, or performance information

Although the final Policy Statement is largely consistent with the proposed Policy Statement issued earlier this year, it differs in that it eliminates a proposed requirement for antitrust pre-clearance for ACOs with a market share of greater than 50 percent in any common service in each participant's PSA. Although the requirement for mandatory review has been eliminated, expedited voluntary antitrust review is available to ACOs outside of the safety zone. The agencies promise a response to requests for expedited review within 90 days. Given the ambiguity around ACOs with higher participant market shares, the option of obtaining prior review by the agencies will likely be attractive to many providers.