“There is general recognition that the process of creating and ACO as envisioned by the CMS proposed rule is arduous and one that relatively few, if any, providers will even attempt,” wrote Chip Kahn (PDF) , president and CEO of the Federation of American Hospitals, which represents investor-owned hospitals. “Without significant improvements to the policy as well as the CMS proposed rule, we are concerned that interest and commitment from potential ACO stakeholders will be limited.”
The AHA and FAH issued their criticisms as part of their official comments to the U.S. Justice Department and the Federal Trade Commission regarding the federal agencies' proposed regulations on antitrust enforcement of accountable care organizations. The rules are in addition to an overall proposed regulation on ACOs published at the same time by CMS.
In a 24-page letter (PDF) May 31, AHA Executive Vice President Richard Pollack said nothing in the Patient Protection and Affordable Care Act—which authorizes the creation of accountable care organizations—specifically gives the CMS the power to enforce the antitrust laws. But that's what the agency is doing by requiring most proposed ACOs to submit to costly federal antitrust review before the CMS will consider the application for Medicare ACO status.
“Effectively, all of the agencies are attempting to effectuate the antitrust guidelines by bootstrapping the guidelines to a CMS regulation,” Pollack wrote. “There is no precedent to support this kind of back-door approach to regulation.”
The proposed rule would force accountable care organizations with more than 50% market share for certain services within their specific primary service areas to apply for clearance from the FTC or the Justice Department before the CMS will even consider its application.
Both the AHA and the FAH took issue with the way that the antitrust rules were twisting the traditional antitrust enforcement rules into an ongoing regulatory scheme that puts the burden of proving the pro-competitive legitimacy of an ACO onto the providers, rather than leaving it up to regulators to challenge anticompetitive arrangements.
In a separate letter (PDF) responding to a request for comment on the tax implications of ACOs, the AHA requested that the IRS issue an “unequivocal statement” that participating in an ACO won't jeopardize a hospital's tax-exempt status or generate unrelated business income tax, as long as the organization complies with CMS regulations.
The letter further asks that the IRS address whether ACOs themselves may be tax-exempt, which the AHA argues would encourage not-for-profit hospitals to participate.