To make Accountable Care Organizations (ACOs) more effective, federal enforcement agencies have issued two waivers that exempt ACOs from prosecution under existing health care regulations. These official agency pronouncements, released in late 2011, will directly impact Ambulatory Surgery Centers (ASCs) – even if the surgery center does not join an ACO.
The first waiver, involving antitrust laws, allows ACOs to bring together normally competing providers, potentially including ASCs, to coordinate care. The second waiver, involving health care fraud and abuse laws, provides incentives to physicians to use new approaches to patient care, which might possibly include referrals to ASCs.
Several lawyers specializing in each area of these waivers were interviewed for this article and asked to consider how surgery centers would be impacted. In a few areas they disagreed, demonstrating how complex and nuanced the enforcement agencies’ pronouncements can be.
Under the antitrust waiver, the lawyers said surgery centers will be able to share certain pricing information that is normally kept confidential. They noted, however, that even if ASCs do not join their local ACO, the waiver affords them protections against the ACO’s market power.
Under the fraud and abuse waiver, the lawyers said it allows the ACO to use its “shared savings” payments to reward providers to use more effective forms of care, such as a patient-centered medical home. But the attorneys were split on whether shared savings could reward physicians for referring patients to surgery centers. Two of the experts argued that ACOs would be able to offer very limited incentives, while another said it could not be done at all. Further guidance from the federal fraud and abuse agencies appears to be needed on this point.
ASCs & Antitrust
On October 20, 2011, the two federal antitrust enforcement agencies, the Department of Justice and the Federal Trade Commission, released a final policy statement on how antitrust laws would apply to Medicare-approved ACOs that deal with commercial payors. The statement is focused on ACOs’ arrangements with private payors, since Medicare prices are set by the federal government and are not in danger of being fixed.
The Antitrust Safety Zone
The final policy statement identifies an “antitrust safety zone,” in which ACOs would not be challenged, except in extraordinary circumstances. In order to qualify for this zone, an ACO cannot require surgery centers or hospitals to be “exclusive.” In other words, they would still be able to participate in other ACOs in the same market.
But several of the antitrust attorneys said it would be difficult for many ACOs to qualify for the safety zone. Essentially, ACO participants would have to represent 30% or less of the local health care market in each area of service, a designation that appears to correspond with a specialty. Douglas C. Ross, chair of litigation at Davis Wright Tremaine’s Seattle office says there could be dozens of areas of service in a single ACO and participants would have to make up less than 30% of the market in every one.
But, Ross said, ACOs that cannot qualify for the antitrust safety zone still have significant protections. The enforcement agencies won’t designate these ACOs as per se “illegal,” a standard that would be difficult for them to overcome, but will instead apply the “rule of reason” standard, which involves weighing anti-competitive features or the ACO against the ACO’s pro-competitive features.
In arrangements that do not qualify for the anti-trust safety zone, ASCs and other providers should not be required to exclusively contract with one ACO. The policy statement denotes exclusive contracting with surgery centers and other entities as an activity that “may raise competitive concerns” about these ACOs in the marketplace.
An earlier draft of this statement required agency review of ACOs that had more than 50% market share, but that stipulation was eliminated in the final version. Even so, Rob McCann, a partner at Drinker Biddle in Washington, DC, said all ACOs need to have documentation on file. If an agency suspects a violation, it will perform a “facts and circumstances analysis,” and ask for documentation. Meanwhile, new ACOs that want guidance can request a 90-day antitrust review by the agencies.