Gregory Pelnar, Mar 30, 2011
An Accountable Care Organization (“ACO”) is “an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.” The Affordable Care Act of 2010 (“ACA”) encourages the formation of ACOs to provide medical care to Medicare beneficiaries and, if they meet quality thresholds, to share in the cost savings they achieve for the Medicare program. One hope is that ACOs will reduce the fragmentation of care across providers who have little, if any, communication with one another about the health status of their common patients, resulting in low-quality care (e.g., duplication of tests, prescriptions with adverse interactions, and unaddressed health problems that “fall through the cracks” because the patient’s other physician was supposed to address them). A still greater hope is that the hoped-for improvement in coordination of care will lower health care costs.
The Centers for Medicare & Medicaid Services (“CMS”) plans to establish a “Shared Savings Program” (“SSP”) by January 1, 2012. The statutory requirements for an organization to participate in the SSP include: (1) a minimum of 5,000 assigned Medicare beneficiaries; (2) an agreement to participate for at least three years; and (3) defined processes to promote evidence-based medicine, coordinate care, and report the data necessary for the evaluation of quality and cost. The statute specifies a number of organizations that may become an ACO: physicians and other professionals in group practices or in networks of practices; partnership or joint venture arrangements between hospitals and physicians and other professionals; hospitals employing physicians or other professionals; and other organizational forms that the Secretary of Health and Human Services (“HHS”) may deem appropriate. The CMS is in the process of determining how the program will be implemented, including requirements for an organization to qualify as a Medicare ACO and how any savings generated will be measured and shared.
The Federal Trade Commission (“FTC”) and the Antitrust Division of the U.S. Department of Justice (“DOJ”), meanwhile, are in the process of attempting to devise antitrust guidance, including safe harbors, for the ACOs participating in the SSP and, since those ACOs are expected to contract with health insurers in the private (“commercial”) sector, the safe harbors may cover commercial ACOs as well. FTC Commissioner J. Thomas Rosch notes that the formation of ACOs raises three antitrust concerns:
1) ACOs run the risk of illegal price fixing if they engage in joint price negotiations with private payers…
2) ACOs may be able to exercise market power, particularly in rural markets, and thereby increase health care costs…
3) There is also a risk that ACOs could facilitate collusion by participants when operating outside the venture.
The FTC, CMS, and Office of the Inspector General (“OIG”) for the Department of Health and Human Services held a joint workshop on October 5, 2010 to solicit the views of interested parties. Regarding antitrust guidance and safe harbors, FTC Chairman Jon Leibowitz posed the question: “[H]ow can we design rules for ACOs that are flexible enough to allow the health care community to collaborate to improve quality and decrease costs but obviously not to create undue market concentration and not to affectively end up fixing prices?”