Hospitals and doctors lobbied enforcement agencies to produce specific legal guidelines under antitrust and fraud and abuse laws. “This is a tremendous step forward,” said David Balto, an antitrust attorney and a senior fellow at the Center for American Progress, who said enforcement agencies previously adopted an “overly skeptical” scrutiny of providers.
Medicare will offer financial incentives—and penalties, under proposed rules—to the networks starting next year, based on quality performance and cost-controls.
Insurers raised concerns in letters to the CMS that providers could gain too much leverage in negotiations under the new networks. The Blue Cross and Blue Shield Association declined an interview request, and a spokesman said officials were reviewing the proposal.
Justice Department and FTC officials said last week that the proposed antitrust policy sought to promote more efficient healthcare delivery without weakening antitrust laws. “We believe there is no area of the economy that can benefit more from collaboration than in healthcare,” said Christine Varney, assistant attorney general in charge of the Justice Department's antitrust division.
“By forming an ACO, one is not exempt from the antitrust laws,” Varney said. “Those who collaborate to fix prices inappropriately will be prosecuted.” Jon Leibowitz, chairman of the FTC, said Medicare could see greater savings than the up to $960 million CMS actuaries have estimated over three years if the rules encourage ACOs to compete against one another.
The FTC and Justice Department proposed an exemption, or safety zone, from antitrust scrutiny for alliances that account for up to 30% of Medicare fee-for-service business in local service areas. Hospitals must determine inpatient market share for all insurers, when possible.
Authorities will measure market clout for each service, such as primary care or separate specialties, when at least two competing providers within an ACO offer the same service in the same area. The largest accountable-care groups—those with at least half of the Medicare fee-for-service in a local service area—must undergo an antitrust review.
“It's unusual and may well be unprecedented,” said Jeffrey Brennan, an antitrust attorney with Dechert and a former associate director in the FTC's competition bureau, of the proposed antitrust review of the largest alliances seeking status as Medicare ACOs. “Everyone agrees there's a place for competition in healthcare,” Brennan said, and antitrust authorities have the expertise to scrutinize ACOs' clout to asses whether “the effect will be anti-competitive or bad for patients” because it leads to higher prices.
Under the proposal, reviews would be expedited and close within 90 days after necessary documents are received by authorities. A joint Justice Department and FTC work group will address issues that arise from expedited reviews, an idea that prompted the sole dissenting FTC vote for the proposal from Commissioner J. Thomas Rosch, who wrote that he wanted the FTC to be in control oversight, calling the Justice Department more susceptible to political pressure.
The FTC and the Justice Department would use less-stringent criteria to review private-market ACOs already approved by the CMS to operate under Medicare, as long as private-market networks operate identically to Medicare networks.
ACOs must include otherwise independent providers and must have been created after the March 23, 2010, passage of the Affordable Care Act to be eligible under the policy. Healthcare attorneys questioned how agencies would enforce the policy and how antitrust scrutiny would differ, if at all, for networks created before the deadline.
Alliances with 30% to 50% of business in an area may seek an expedited antitrust review under the policy. Those that fall within that market window should avoid a few practices that would raise antitrust concerns, outlined in the policy.
The CMS and HHS' inspector general's office, meanwhile, have proposed waiving the Stark law restrictions on physician referrals and the anti-kickback statute for financial relationships among providers participating in Medicare ACOs, including distribution of money earned from the program's shared savings mechanism among participating providers, which could be construed as financial reward for referrals.
As the agencies strived to sort out the risks that come with integration, HHS Secretary Kathleen Sebelius, in a call with reporters, touted its promise. “Today, the fragmented way we pay for care often stands in the way,” she said.