10.21.2011 FTC/DOJ Final Policy Statement on Accountable Care Organizations (ACOs) Eliminates Mandatory Antitrust Reviews

On October 20, the Federal Trade Commission and the Department of Justice issued their long-awaited joint policy statement concerning how Accountable Care Organizations (ACOs) would be treated under the federal antitrust laws. ACOs, of course, are a creation of the Affordable Care Act, and are organizations of health care providers that jointly offer their services in a manner designed to reduce costs and improve the quality of patient care. While such organizations are principally intended to provide such services to medicare beneficiaries under the Medicare Shared Savings program, ACOs are also permitted, and expected, to operate in the private insurance arena as well. Accordingly, in recognition that the degree of collaboration among otherwise competing health care providers necessary to form and operate a successful ACO also has the potential, in some circumstances, to have adverse impacts on competition, the FTC and the DOJ have been hard at work crafting guidance on these issues in advance of the 2012 launch date for ACOs. To that end, in March of this year the FTC/DOJ issued a draft policy statement on this subject, inviting comments from the public. The October 20 pronouncement constitutes the agencies’ final guidance, issued just in time for providers interested in forming ACOs to assess the antitrust risks associated with their plans before many ACOs become operational.

While the final policy statement tracks the FTC/DOJ’s March draft statement in almost all respects – despite the agencies’ receipt of over 100 comments urging modifications to virtually every aspect of the draft statement – it does contain one extremely significant modification. In recognition of the concerns expressed about the cost and burden that would be created by the mandatory, pre-operation antitrust reviews of ACOs called for in the draft policy statement (a process similar in concept to the Hart-Scott-Rodino Act pre-consummation approval process for mergers), and the suggestion that such a process might chill the creation of ACOs altogether (thus eliminating the potential for cost savings for which they are designed), the FTC/DOJ have decided to scrap the idea of mandatory pre-operation antitrust reviews.

Rather than subjecting ACOs to mandatory antitrust reviews, the final policy statement provides that an ACO may seek a voluntary review from the agencies, if it chooses to do so. The agencies commit to “expedite” such reviews, reaching a decision as to whether the ACO’s structure and proposed activities pass antitrust muster within 90 days of submission. Alternatively, an ACO that is approved by the Center for Medicare and Medicaid Services (“CMS”) as to its non-antitrust attributes may simply commence operations without any such review, subject, of course, to FTC/DOJ oversight and enforcement activity should the agencies subsequently conclude that the ACO has engaged in anticompetitive conduct (in much the same way that health care provider collaborations generally have been addressed since the FTC/DOJ Statements of Antitrust Enforcement Policy in Health Care were issued in 1996). Given these options, it seems highly unlikely that many ACOs will go to the time, trouble and expense of seeking a voluntary review, but only time will tell.

With respect to the remainder of the final policy statement, it remains virtually unchanged from the draft guidance issued in March. Accordingly, the final policy statement provides that legitimately formed ACOs will, in almost all circumstances, be judged under the antitrust “rule of reason,” balancing the procompetitive benefits of the collaboration against its potential for anticompetitive harm in assessing its lawfulness, and will not simply be condemned as a per se unlawful combination of competitors. In addition, the final guidance preserves the antitrust “safety zone” that was set forth in the draft guidance. As such, where an ACO’s participants providing a common service have a combined share of 30 percent or less in each participant’s “primary service area,” absent unusual circumstances the ACO’s activities will be deemed not to be anticompetitive. The final policy statement also provides examples of conduct that can raise competitive concerns, including guidance on avoiding conduct that may facilitate collusion among ACO participants in the sale of competing services outside of the ACO and other activities that may prevent private insurers from obtaining lower prices and better quality services for their members.

You can access a copy of the FTC/DOJ joint statement at the following web address:

For more information about this topic, please contact any member of the Williams Mullen Antitrust - Health Care Team.

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