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A Not So Modest Proposal? The FTC/DOJ Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program

David Pearl, Toby Singer, May 12, 2011

On March 31, 2011, the Federal Trade Commission and the Antitrust Division of the Department of Justice (the "FTC and "DOJ" or the "Agencies") issued a Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program. ("Proposed Statement). The Proposed Statement offers guidance concerning how the Agencies will review for antitrust compliance combinations of physicians, hospitals, and other providers into Accountable Care Organizations ("ACOs") created pursuant to the Medicare Shared Savings Program of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the "Affordable Care Act"). The thrust of the Medicare Shared Savings Program is that providers who form ACOs that lead to reduced costs for Medicare will share in any savings they helped create.

At a glance, it may not be apparent how a program to incentivize health care providers to lower Medicare costs could implicate the antitrust laws. Indeed, if an ACO chooses to contract only with the Medicare program, one would anticipate very little interest on the part of the Agencies. However, providers have made clear that they are unlikely to form ACOs unless they might also use them for their commercially-insured patients; because ACOs by their very nature involve competitors acting in concert, extending their reach to the commercial setting raises antitrust concerns and inevitably attracts the attention of the FTC and DOJ.

The Proposed Statement arises out of tight coordination between the Agencies and the Center for Medicare and Medicaid Service ("CMS"). One of the Proposed Statement's major accomplishments is to confer automatic Rule of Reason treatment on any ACO that has met certain eligibility criteria for the Medicare Shared Savings Program laid out in the CMS Notice of Proposed Rulemaking, Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations ("CMS Proposed Rule"). This represents a remarkable development, both because it pegs the Agencies' antitrust analysis to standards created by a different agency and because so much of the Agencies' prior evaluation of clinically integrated networks involved assessing whether or not the Rule of Reason was appropriate under a given set of circumstances. The removal of doubt regarding whether to apply the Rule of Reason seems to have shifted the emphasis forward such that the bulk of the Proposed Statement focuses on which ACOs need to undergo antitrust analysis in the first instance.


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