Today, led by Chief Justice John Roberts, the Supreme Court upheld the constitutionality of the Affordable Care Act in almost all respects. While upholding the controversial individual mandate to purchase health insurance, the Court did alter one important aspect of the law, however, in that it limited the government’s ability to withhold all Medicaid funds from a state contingent on the states’ acceptance of the significant Medicaid expansion called for under the Act. Under the Court’s ruling, a state must be allowed to opt out of the Medicaid expansion without threatening the state’s current Medicaid coverage and federal funding. The text of the decision can be found here.
The Department of Justice (DOJ) and the Federal Trade Commission (FTC) (together, “the antitrust agencies”) have raised as many antitrust questions as they have answered with their March 31, 2011, Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (“Policy Statement”). Although the Policy Statement is styled as a mere statement of antitrust enforcement policy for accountable care organizations (ACOs), similar to earlier enforcement statements, in fact it is issued in support of a proposed regulation from the Centers for Medicare & Medicaid Services (CMS), regarding the Medicare Shared Savings Program and ACO provisions of the Patient Protection and Affordable Care Act (PPACA). As such, the antitrust agencies clearly have taken on a much more significant role in the regulatory review process of a sister agency than previously. That regulatory entanglement can be seen in provisions of the Policy Statement that attempt to reconcile the contradictory goals of reducing antitrust uncertainty for ACOs in order to facilitate participation in the Medicare Shared Savings Program, while sending a strong enforcement message that the antitrust agencies will not tolerate ACOs that acquire the ability to exercise market power in commercial markets. The results are highly technical rules intended to allow ease of application, but which, as discussed below, raise many questions as to their meaning and likely application. Comments on the proposed Policy Statement are due on or before May 31, 2011, which is within 60 days of publication in the Federal Register.
Purpose of Antitrust Review of ACOs
Although the antitrust agencies published their Policy Statement as a separate document for notice and comment, CMS provided its own explanation for the role of antitrust review in the Medicare Shared Savings Program. In CMS’ proposed rule, it identified three reasons for its incorporation and reliance on the antitrust agencies’ Policy Statement: (i) ACOs that do not face significant antitrust risk are likely to complete the three-year commitment that CMS requires without disruption of the program due to antitrust challenge, (ii) ACO-versus-ACO competition is likely to improve the clinical quality of care that Medicare beneficiaries receive and (iii) ACOs exercising market power in the private market are likely to prefer private pay patients over Medicare patients and, thus, to limit access by Medicare patients to their services. The antitrust agencies, in turn, explained that they issued their Policy Statement “to maximize and foster opportunities for ACO innovation” and “both to clarify the antitrust analysis of newly formed collaborations among independent providers . . . and to coordinate the antitrust analysis with the CMS.”
On November 10, 2010, the Centers for Medicare & Medicaid Services published a Notice in the Federal Register soliciting comments on Accountable Care Organizations. The Notice specifically requests that interested parties comment on various areas including the following:
- Policies to ensure that solo and small practice providers may participate in ACOs;
- Beneficiary attribution to the ACO;
- Methods to assess beneficiary experience within the ACO;
- Patient-centeredness criteria for assessment of ACOs;
- Quality measures that should be used in the ACO program; and
- Other payment methodologies should be tested through the Centers for Medicare & Medicaid Innovation
Comments must be submitted to the agency by December 3, 2010.
On October 5, 2010, the Centers for Medicare & Medicaid Services, the HHS Office of the Inspector General and the Federal Trade Commission (FTC) will co-host a workshop on issues related to Accountable Care Organizations (ACOs). The workshop will address the legal issues presented by various ACO models.
The deadline for comments to be submitted for inclusion in the workshop is September 27, 2010. Instructions on how to submit comments and how to register for the event are provided in the Federal Register Notice.
A state insurance decision out of Massachusetts is potentially very informative for how implementation of healthcare reform initiatives will play out. Strong nationwide debate is underway regarding the authorization to regulate health plan rates and medical loss ratios pursuant to the Patient Protection and Affordable Care Act. Small group insurance rate regulation has played a significant role in that debate and gave rise to the controversy addressed in the June 24 decision by the appeals board in the Massachusetts Division of Insurance. The appeals board focused on provider market power as a driver of increasing costs and found the health plan’s efforts to contain provider costs and utilization reasonable, along the road to deciding that the plan’s proposed small group rate increases were not unreasonable. As healthcare reform moves forward, similar issues may well arise in other states or in reviews undertaken by federal regulators and the Massachusetts decision could prove to be an important precedent.
Please click here to see the decision.
In a speech to the American Medical Association (AMA) on June 14, Jon Leibowitz, chairman of the Federal Trade Commission (FTC), reiterated the FTC’s enforcement position on clinical integration and emphasized the Commission’s willingness to offer guidance on proposed collaborations. He also noted that the health care reform law contains provisions intended to promote innovative payment structures, including Medicare pilot programs for accountable care organizations (ACOs). Chairman Leibowitz said that “so long as the government purchases the services and unilaterally sets payment levels and terms, there won’t be an antitrust issue [with ACOs].” However, he also observed that ACOs may move into the private sector and create competition issues. Although he did not elaborate, a potential area for concern is the possibility that the level of integration necessary to become an ACO will not be as great as the level of integration required under current federal antitrust policy to allow providers to negotiate collectively with health plans. Another possibility is that the size of ACOs either required by HHS or prompted by HHS’s rules is so great that the ACOs will aggregate market power in violation of the antitrust laws. Given that ACOs are, as Chairman Leibowitz said, “in the very early stages of formation and evaluation,” it is too early to predict whether these concerns will be borne out. Nevertheless, recognizing the potential impacts on competition of payment reform provisions of the healthcare reform law, Chairman Leibowitz announced that in the fall, the FTC will hold a public workshop on “competition policy, payment reform, and the new models for delivering high-quality, cost-effective health care.” He stated that the Commission “will focus on how ACOs could affect competition among commercial payers and provide consumers with access to affordable health care services.”