Now six months since President Barack Obama signed the Patient Protection and Affordable Care Act into law, the federal agencies responsible for interpreting and enforcing the nation's antitrust and healthcare fraud-and-abuse laws are doing much the same thing as providers: They are scrambling to understand a changing landscape as it morphs around them.
Under the healthcare reform law, by no later than 2012 Medicare must be rewarding providers that work together in ACOs to manage and coordinate care, if they meet quality benchmarks and achieve savings measured against what the government would expect to spend on beneficiaries with a similar mix of characteristics (as with many elements of the law, to be determined later).
The law also establishes a five-year national pilot program on payment bundling—the subject of an existing demonstration project—and extends a demonstration project on gain-sharing, a cousin to the “shared savings” payment mechanism built into the ACO provision. The most-integrated ACOs might also share partially capitated rather than fee-for-service payments for their Medicare beneficiaries.
The Federal Trade Commission, the CMS and HHS' inspector general's office say they are working through the issues collaboratively and plan to stage a workshop Oct. 5 that would bring together officials, stakeholders and policy experts at CMS headquarters in Baltimore.
“From our point of view this is really an opportunity for the FTC to learn more how providers want to put together ACOs,” says Susan DeSanti, director of the FTC's office of policy planning. “Because antitrust is so fact- specific, we think it would help a lot to hear from providers, payers and other participants in the marketplace.” It's important that agencies work together, she says, to avoid situations in which the CMS might, for example, reward the performance of an ACO while the FTC hits the same providers with an antitrust complaint and the inspector general's office questions whether the referrals among the ACO's members are tainted by kickbacks.
Asked if the FTC and fellow antitrust enforcers in the U.S. Justice Department might end up revising or amending their seminal “Statements of Health Care Antitrust Enforcement Policy” issued in 1996, DeSanti says, “That is just something we can't know at this point.”
FTC Chairman Jon Leibowitz acknowledged in a June speech delivered to the American Medical Association's House of Delegates that accountable care organizations and perhaps other models encouraged by the reform law could affect antitrust enforcement, particularly as providers extend them beyond Medicare into their contracts with private payers.
“Such a transition could indeed raise competition issues, and we want to work with you going forward,” Leibowitz told the AMA delegates, a group that has long prodded the government for greater leeway or at least more detailed guidance for independent practices seeking to contract jointly with health plans. Price-fixing is not a risk if an ACO exists only in the realm of care and reimbursement for Medicare beneficiaries on the government's terms, though the accumulation of market power as big players merge or form joint ventures could draw a different sort of antitrust scrutiny. The FTC, however, hopes providers will form ACOs on a scale that pits them against one another for business.
Leibowitz emphasized that the goals of many provisions in the Patient Protection and Affordable Care Act—improvements in the quality and efficiency of healthcare delivery—are the same goals that drive antitrust policy and enforcement. He noted, for example, that bundled payments—in which Medicare and Medicaid reimbursement will be divvied up among various facilities and physicians contributing to a single episode of care—provide a level of financial risk-sharing that might allow alliances of competing providers to contract with private payers without drawing price-fixing allegations.
Provisions of the reform law might also technically set up providers to violate, at least technically, the anti-kickback statute, which bars any type of remuneration tied to the volume or value of referrals, and what's known as the Stark law, intended to prevent Medicare referrals tainted by a physician's financial interest. Another hurdle might be the authority of HHS' inspector general's office to penalize providers for creating incentives to limit or withhold care.
“What are kickbacks going to look like in this integrated world?” Vicki Robinson, chief of the industry guidance branch of the inspector general's office, posed to a session this summer at the annual meeting of the American Health Lawyers Association. She suggested that new payment models always give rise to conflict about how organizations pick their business partners, and those motivations will be scrutinized. It's unclear, though, whether the government will conceive a new framework to judge them.
“These ACOs are going to be a way to reward physicians and move patients to more efficient providers,” says W. Bradley Tully, a partner in the law firm Hooper, Lundy and Bookman in Los Angeles. “I would say the idea of doing ACOs hits the heart of all this. CMS has been very concerned historically about financial considerations influencing physicians in any way, and now from another perspective they're saying, let's rethink this—let's see if we can get physicians to provide more efficient care.”
Tully says it has been rumored that the CMS plans to issue some sort of regulation that would provide broader guidance than advisory opinions to individual applicants, yet stop short of defining “template transactions” that would tell providers exactly how to structure deals that steer clear of trouble.
A CMS spokesman declined to comment on the agency's course, responding in an e-mail that “these are some of the issues that we are considering, and the relevant agencies are working together.”
J. Peter Rich, a partner in the Los Angeles office of the law firm McDermott Will & Emery, says providers looking to federal agencies for clarity on the antitrust and fraud-and-abuse issues arising from the healthcare reform law won't find it yet. “I'm not sure there are any answers,” says Rich, who contributed to a recent newsletter his firm issued on the payment and delivery provisions of the law.
Rich says what's deterring providers more than any legal uncertainty is whether embarking on something as complex as an ACO will pay off, particularly because the statute allows Medicare patients assigned an ACO to seek care outside the network of providers ostensibly being held accountable. “There are a lot of question marks here,” Rich says. “Everybody's excited about doing something, but they're waiting to see what that something is.”
That may be so, but quite a few healthcare organizations are not waiting and have announced plans to form ACOs in order to be ready for whatever materializes. Among providers that have announced plans, in addition to the Accountable Care Alliance in Omaha, are 10-hospital Baylor Health Care System, Dallas; 25-bed Bell Hospital in Ishpeming, Mich., with 315-bed Marquette (Mich.) General Health System; and CaroMont Health, the parent of 397-bed Gaston Memorial Hospital in Gastonia, N.C.
Hahn, the lawyer working with the participants of the Omaha ACO, says he has attempted to draft flexible documents. to allow the alliance to evolve with federal policy and the marketplace. “My notion was, we don't know what's going to be coming, so let's build them as flexible as possible,” says Hahn, a partner in the law firm Husch Blackwell.
The Omaha alliance is made up of the established physician-hospital organizations of 511-bed Nebraska Medical Center and two-hospital Methodist Health System. The ACO will adopt uniform clinical protocols and benchmarks, but each PHO will be responsible for collecting and distributing the money, Hahn says. A more intimate financial mingling might happen down the road, Hahn says, adding, “That presents potentially its own set of antitrust issues.”
Hahn says the alliance is essentially working to shoehorn its mechanism for distributing savings accomplished by the alliance into advisory opinions in which HHS' inspector general's office has revealed its views of properly conceived safeguards for arrangements that the government calls “shared savings” and are more commonly known as gain-sharing. “They're all a lot the same and they're all pretty rigid,” he says of the advisory letters, which are specific to more than a dozen similar gain-sharing programs that have won a favorable response (applicants retract their applications before a negative opinion sees daylight).
The CMS, meanwhile, last year proposed a Stark exception for shared-savings arrangements but withdrew it after providers balked at the complexity of meeting it. That exercise illustrates the challenge regulators face in providing a balance of clarity and flexibility.
“Hopefully, the government's view will come around to match up with what we think is a new social policy,” Hahn says. “They need to have the law match the social policy.”