NCQA ACO Comment Period Deadline Looming: 11.19.10

Alston & Bird LLP

On October 19, 2010, the National Committee for Quality Assurance (NCQA) released its draft 2011 Accountable Care Organizations (ACO) criteria for public comment. NCQA’s mission is to improve health care quality through its activities, such as accrediting and certifying health care organizations and recognizing clinicians and practices in key areas of performance. The following advisory provides a summary of the draft ACO criteria, as well as a list of issues on whichNCQA requests feedback.

  1. NCQA Definition of ACO

NCQA defines ACOs as “provider-based organizations that take responsibility for meeting the health care needs of a defined population with the goal of simultaneously improving health, improving patient experience and reducing per capita costs.” NCQA notes that while providers will differ in how they organize themselves as ACOs and what components of care delivery they include in their organization, they all “must include a group of physicians with a strong primary care base and sufficient other specialties that support the care needs of a defined population of patients.” Also, clinical and financial incentives should be aligned for providers; this requires an administrative infrastructure to perform functions including managing budgets, collecting data, reporting performance, making payments related to performance and organizing providers around shared goals.

  1. Draft ACO Criteria

There are seven proposed categories of reflecting core ACO capabilities: (1) program structure operations; (2) access and availability; (3) primary care; (4) care management; (5) care coordination and transitions; (6) patients rights and responsibilities; and (7) performance reporting. Within each of the criteria are a number of standards consisting of elements and factors that are scored. Attached to this memorandum is a table outlining the categories, standards and elements included in the draft ACO criteria.

The draft criteria are geared toward assessing whether an ACO has the infrastructure needed to reduce costs, improve health care quality and improve patient experience. In the draft ACO criteria, greater focus is placed on the organization’s capabilities rather than performance. Noting that it will be some time before organizations can be judged primarily on performance measurement, NCQA believes that there must be “clear standards that assess capabilities that improve the likelihood of a potential ACO’s success and that provide a blueprint and a pathway (with clear stages) to full ACO capacity.”

  1. Comments Requested for Specific Issues

In addition to comments on the individual standards and elements in the draft criteria, NCQA is requesting feedback on the following issues concerning the criteria:

  1. Should certain individual standards or elements reflect a core capability that all ACOs should possess?
  2. NCQA is proposing four levels of scoring for ACOs, and the levels would be based on the organization’s demonstrated capability to function as an ACO and improve quality, increase patient satisfaction and lower per capita costs. NCQA is requesting feedback on what should be the expected capabilities for each ACO level.
  3. Does the eligibility criteria capture the organization types that have the capability to act as ACOs (i.e., provide the full continuum of services, coordinate care, manage resources effectively, report performance)? Also, should additional arrangements or structures be considered?
  4. Should the types of specialists included in the ACO be specified in the criteria? If so, must they be part of the organization’s legal structure (i.e., subject to the direct authority of the ACOs governance)?
  5. NCQA provides a list of available standardized measures for clinical quality and patient experience in an appendix. These measures come from NCQA’s Healthcare Effectiveness Data and Information Set (HEDIS®), the Centers for Medicare & Medicaid Services Requirements of Meaningful Use of Electronic Health Records, the Dartmouth Atlas and the Integrated Healthcare Association California Pay for Performance Program. Not all of these measures have been endorsed by the National Quality Forum. NCQA requests feedback on how these currently available measures might be used immediately to report performance.
  6. Do the criteria align with stakeholder expectations for ACOs? Are there gaps or areas not addressed but should be?
  7. For organizations seeking to become ACOs, does the organization have materials or documents to demonstrate compliance with the criteria? If not, which areas are challenging?
  8. Are there critical functions not included in the current draft standards?
  1. Next Steps

Public comments to the draft criteria are due by November 19, 2010. The comments will be considered as the criteria are finalized for release in mid-2011.

For ACO Draft 2011 Criteria, click here.

Original source reference, click here.


‘Fear and Trembling’ at AHIP?

The impending rise of Accountable Care Organizations (ACOs) as market participants, and their apparent autonomy from an ‘institutional partner’ perspective, whether of the clinical or licensing (i.e., payor) variety, is no doubt raising concerns in certain sectors.

Clearly the guidance to date, which enables ACO anointing absent a hospital partner is causing some hospital CEOs, and/or their parent systems, to lose some sleep. However, lets not forget about the health plan or payor community particularly from the point of view of their trade group voice.

Last month AHIP (America’s Health Insurance Plans), released ‘Accountable Care Organizations and Market Power Issues.’

Chief among AHIP’s concerns is the anti-trust downside of unbridled market power leading to concentrated (monopolistic) market influence in the hands of too few (and perhaps ‘untethered’) players:

ACOs have the potential to improve quality and reduce costs for consumers and payers alike, by providing more patient-centered, coordinated, collaborative care. The ACA provides only the broad outlines of the ACO program, and without proper design, provider aggregation could result in market power, undermining the program’s goals of lower costs and higher quality. To avoid bad marketplace outcomes, the ACO rulemaking should structure the program to minimize antitrust concerns.

Might this be a case of the pot calling the kettle black?

Extracting the ‘H’ from P/H/O: The Anatomy of One Unwinding

Gregg Masters, MPH

Since we now find ourselves at the gateway of resurgent if not soon to be robust exploratory conversations between hospitals, their medical staffs, the broader private medical community and the likely joint venture entities to implement any collaborative vision, this time under the aegis of Accountable Care Organization (ACO)  incentives, I thought it might be useful to recall one unwinding for context and educational purposes.

In the 1990s Presbyterian Healthcare System (PHS) in Dallas, Texas (pre-merger with Harris Methodist Health System and Arlington Memorial Hospital into Texas Health Resources), reading the tea leaves of the wisdom of joint contracting with its medical staff formed ‘System Health Providers’ (SHP) a PHO with it’s primary affiliate IPA (independent practice association) ‘Genesis Physicians Group’ (GPG) and it’s risk contracting derivative, Genesis Physicians Practice Association (GPPA).

PHS had previously formed a first generation PHO doing business as ‘JVE’ which stood for ‘joint venture entity’, a most generic of names which none-the-less represented a culture of commitment by both hospital and medical staff leadership to the idea of collaborating minimally to build provider side leverage in the then fast consolidating managed healthcare industry.

Thus SHP represented a ‘PHO 2.0’ effort – if you will, for at least the PHS side of the JV. All seemed to progress quite nicely, as SHP, a messenger model PPO routinely extracted rather premium pricing when contrasted to other DFW systems including Baylor and the then rapidly consolidating Columbia Healthcare network, and held payor agreements with virtually all major players in DFW.

Yet, somewhere on the road to contracting nirvana, the enterprise stumbled across a ‘trigger event’, initially seen as rather innocuous, but which later began a rather unpleasant and painful unwinding process straining long-standing relationships and testing the goodwill of the partners.

In the fine print of the PHO agreement between the two members (PHS & GPG) was an arcane provision titled ‘mandatory redemption’. Though a rather routine legalese provision, what this language addressed were the conditions under which one member would buy back the share or interest (i.e., redeem) in the JV, and effectively terminate the equity basis for collaboration.

In this case, the ‘offending party’ was PHS, and the trigger event was the merger with Harris Methodist Health System and Arlington Memorial Hospital to form Texas Health Resources (THR).

Following the closing of the merger, the leadership of SHP in consultation with the leadership of GPG and their legal counsel determined that PHS had effectively triggered the mandatory redemption provision, thus forcing the valuation of SHP, and subsequent buy back of PHS’s interest. In other words, the ‘H’ was to be eliminated as this PHO was on the road to becoming a ‘PO’ (physician organization).

One curious little sidebar to the unfolding of events was the CEO of SHP had a financial incentive for the buy back to occur, as the terms of his employment agreement (and perhaps stock ownership) called for a payout under certain circumstances (one of which apparently included mandatory redemption).

Needless to say, hospital and medial staff or affiliate joint ventures even in the best of times, can be a tad tense, but throw into the mix a testy ‘divorce’ and one can definitely challenge even the most skillful managers to maintain the peace.

Much time has passed and the ship apparently has righted itself as both entities continue to work together although I have no direct tie to either.

So what lesson(s) can be extracted from this one experience? One is to choose your partner carefully (do you even need one?), be clear on your intentions, and market upside; then study the fine print of your agreements. Better yet, know your value, understand your goals and make sure you account for likely bumps in the road. While much of the discussion in ACO formation will center around the usual suspects of capital, infrastructure, and core management competencies, a far more important ingredient will be a ‘patients first’ collaborative culture, to endure the rocky road of aligning the partners interests in the JV. Then again, since an ACO does not necessarily need to be a ‘joint venture’ per se, with an institutional partner whether hospital or parent system, do you even want to go down that road? It will no doubt get real interesting, real soon.

Gregg Masters, MPH is an independent heath care consultant in San Diego, California, who served as Vice President for Managed Care and Network Management of System Health Providers, Inc., prior to, during and after the formation of Texas Health Resources.

Creating Accountable Care Organizations: A NEJM Roundtable

Thomas H. Lee, M.D., Lawrence P. Casalino, M.D., Ph.D., Elliott S. Fisher, M.D., M.P.H., and Gail R. Wilensky, Ph.D.

N Engl J Med 2010; 363:e23


Under the Affordable Care Act, Medicare will launch a Shared Savings Program for groups of health care providers that join forces, with or without hospitals or health plans, to form legal entities that agree to take responsibility for the quality, cost, and overall care of a population of patients. What will these accountable care organizations (ACOs) look like? Who will step forward to form them? What are the best pathways and likely hurdles to achieving ACO status? What are the risks of entering the arena, and what are the expected benefits for clinicians and patients? In a roundtable discussion moderated by Dr. Thomas Lee, experts Lawrence Casalino, Elliott Fisher, and Gail Wilensky explored these and other questions.

To watch video clip, click here.

Transcript extract:

1. Introduction to ACOs

DR. THOMAS LEE: Welcome to a video roundtable of the New England Journal of Medicine on accountable careorganizations. I’m Tom Lee, an associate editor of the Journal and network president of Partners Healthcare. In atime of incredible transition in health care, we’re all hoping that where we are headed is a delivery system thatdelivers higher-quality care more efficiently. Are accountable care organizations, or ACOs, the vehicle? Whateveryone says is the devil is in the details.To talk about that today, we’ve got three experts with complementary perspectives. We have Gail Wilensky, aneconomist and senior fellow at Project Hope, who served in a variety of roles with relevance to this topic, includingadministrator of the Health Care Financing Administration and chair of MedPAC. We have Elliott Fisher, who is thedirector of the Center for Health Policy Research and a professor of medicine at Dartmouth Medical School. And wehave Larry Casalino, who is the chief of the Division of Outcomes and Effectiveness Research and a professor atWeill Cornell Medical College.

To download complete transcript, click here.

Integrated Healthcare Association White Paper: Accountable Care Organizations in California – Lessons for the National Debate on Delivery System Reform

The Integrated Healthcare Association has released a timely and insightful White Paper titled ‘Accountable Care Organizations in California: Lessons for the National Debate on Delivery System Reform‘.

California has 285 physician organizations with many of the characteristics described in the national debate, and its experiences with these organizations over the past thirty years, both positive and negative, offer insight into the challenges that Federal policymakers will face with ACO implementation. This paper outlines five overarching aspects of California physician organizations – their organizational structures, payment methods, relationship with health plans, how they promote consumer choice, and the public policy and regulatory constraints they face – and offers ten key lessons for the national ACO debate.

The ten lessons derived from the five key features and described in detail in the report are:

1. A variety of organizational structures are effective at delivering high quality coordinated care; at least as important to success as structure are an organization’s capabilities, culture, and infrastructure, as well as the alignment of goals between the organization and its individual physicians.

2. In California, a range of relationships exist between physician organizations and hospitals. Alignment of incentives between physician organizations and hospitals offer important opportunities for performance improvements across the entire continuum of care.

3. As a method of payment, capitation can be effective at encouraging coordinated care, but payment methods should vary across ACOs depending on an organization’s ability to assume risk. Fee-for-service payment with shared savings has not proven a successful incentive for the efficient delivery of care.

4. Health plans acting in concert on payment methods and performance measurement helped facilitate the growth of California’s provider organizations, and should also play an integral part in fostering ACO development nationally.

5. ACOs are not a panacea for health care spending control. Some large provider organizations have gained bargaining power and raised prices. Capitation payment and consumer cost sharing partially offset tendencies toward raising prices.

6. ACOs must be agnostic to insurance type; most provider organizations in California have focused on commercial, Medicare, and Medicaid HMO plans for their patients, but for ACOs to be viable across the country, mechanisms must be found to encourage PPO and traditional Medicare and Medicaid patients to use their services.

7. Balancing patient choice with the desire to decrease costs and effectively coordinate care is difficult. California’s experience underscores the challenge of promoting care coordination in an environment of unrestricted provider choice.

8. Regulation of the financial solvency of provider organizations is important to ensure market stability.

9. Consumer protections from capitated provider organizations need to be balanced, not overburdening.

10. Special attention must be given to establishing ACOs in geographic areas with identifiable social and economic challenges. Some California ACOs have been very successful at managing care for Medicaid patients, despite low payment rates from the state.

The report was funded by IHA and co-authored by James C. Robinson and Emma L. Dolan, a graduate student in public health and public Policy at UC Berkeley. The complete report is available at

Doctors: The Sky Is Not Falling

Jeffrey L. Cohen

In the 90s, physicians were told “The sky is falling. You have to find a tree to stand under or you will be crushed.” The “trees” were things like IPAs and PHOs. The future outlook was bleak. All patients were going to be part of some system with which the physician would have no input or control. Decisions would be made on purely business grounds. And the end of fee for service medicine was at hand. NOT.

Here we are today in the face of a national healthcare reform drive. Again, any claim the sky is falling and civilization as we know is will be undone. It is the end days for private practice of medicine. NOT.

The truth is clear: this is a time of serious change in terms of how the United States intends to view and approach the delivery and payment of healthcare. The creation of Accountable Care Organizations (“ACOs”) and the dominant role of insurance companies and Pharma sound
terrifying. terrifying. Clearly, the stated intent is to reduce cost and improve outcomes.

Things like clinical pathways are coming back into focus. Discussions about Physician Hospital Organizations (PHOs), Independent Practice Associations (“IPAs”) and Super LLCs are being renewed and reconsidered against the changing landscape. The market that once existed for sellers of medical practices has withered. Certain specialties, like cardiology, are being hit extremely hard with cuts not only on physician services, but also on diagnostic imaging services that drive a lot of revenue to them. And once again the gong of the death of solo and small practices is being banged once again. Physicians are understandably frightened.

Change is change. It upsets people. And this is not the first time in the past 20 or so years that physicians have been at the butt end of it. That said, they should be wary of the “end of days” salesmen, those which sell products and strategies based on the assumption that life as they know it will end. Physicians should take a hard and long look at the things they are being asked to buy in order to survive the coming tsunami. Does the vendor have an economic stake in the decision? Buyer beware.

So, what are the most popular myths floating around now?

1. You have to spend a lot of money very quickly to comply with the HITECH Act and to get the incentive money for using EMR. Wrong. In fact, physicians that jump quick are likely to get sold stuff that is expensive and doesnt work. Instead, take your time to have an IT expert with no products to sell evaluate your IT needs and see what the most workable options are. Spend more time on the “shoe fitting” and take your time making a decision to buy.

2. Physicians that are in small and solo practices will die off quickly. The simple truth is has always been that small practices are, generally speaking, economically inefficient and limited. Thats not new! What is new is that there are more economic and regulatory pressures and any healthcare reform will be paid, in part, by payment reductions to physicians. Mega groups are an option,
but just one. Look at all forms of alignment and integration, including IPAs, PHOs and others.

3. Mega Practices Rule. Nah. It really depends on the “glue” of the practice. are they together simply to get new revenues from ancillary services? Many are, and that does not create great strategic advantages. The bottom line in terms of market position is (and always has been): a financially efficient business model (low expenses and high income) which accomplishes and demonstrates value.

4. Accountable Care Organizations Will be Physician Led. Though the opportunity certainly exists and think-tankers favor physician led ACOs, the simple truth is that creating ACOs requires huge time availability, business expertise and capital, the very things that physicians are most challenged by. That said, physicians are at the center of any ACO model and their participation and leadership in ACO development and operation is critical.

5. This is the End of Fee-For-Service Medicine. Probably not. Though the legislation clearly identifies FFS compensation as the villain for our country’s healthcare spending, and though risk based compensation will likely play a larger role, some of the Stage 1 cost savings models pay on a fee for service basis. Moreover, it is important not to become entranced entirely with the insured market. There is a First Tier market of proprietary products and models, like VIP and Concierge practices which will likely grow for high patient contact practices (e.g. cardiology, internal medicine, diabetes).

I personally do not see the end of the medical world, though I do see big changes over many years. I do not see the end of the solo or small practice, though I do see more economic stresses. And I do not see a “one size fits all” solution at all. The options require careful and calm analysis. And the old hard-won strategies that have always won will always win:

2. Increase profitability by any legitimate means that is sustainable. For instance, practicing medicine with a bunch of other physicians you do not want to be around or speak with may be profitable but not sustainable;

3. Make your lifestyle more digestible, a particularly challenging request in sunny South Florida; and

4. Ensure that any strategy you enact include (a) increasing reliance on workable EMR, and (b) tracking, improving and communicating clinical outcomes.

Change is here. More change will come. It is not an end, but rather always something new, surprising and never quite as awful as anticipated. Healthcare reform is less a thing than a conversation at this point. That said, we should all be proactive in plotting our futures. Be adaptable. Be smart. And be patient.

Jeffrey L. Cohen, a board certified healthcare attorney with over 25 years of healthcare law experience, we bring experience, knowledge and practical advice to a wide-range of healthcare related entities such as physicians, medical staffs, home health agencies, surgery and imaging centers and many others.

Audio Recording: Workshop Regarding Accountable Care Organizations, and Implications Regarding Antitrust, Physician Self-Referral, Anti-Kickback, and Civil Monetary Penalty (CMP) Laws

On October 5th, 2010 the Federal Trade Commission, the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services’ Office of Inspector General co-hosted a workshop on several issues associated with Accountable Care Organizations (ACOs), organizations authorized by the new Affordable Care Act that seek to deliver high-quality and efficient health care services to consumers.  The workshop addressed and solicited public comments on the legal issues raised by various ACO models being considered by health care providers.


October 5, 2010 :: 9:00 a.m. EST

Audio Recording of Morning / Opening Comments and FTC Panels

Morning Transcript

October 5, 2010 :: 1:30 p.m. EST

Audio Recording of Afternoon / HHS Panel and Listening Session

Afternoon Transcript

…..And Now for Something Completely Different?

Mark Browne

Mark Browne is an experienced physician executive working as a healthcare consultant with PYA. He can be found as @consultdoc on twitter.

Last week the healthcare world was all abuzz. The federal government was set to begin the journey that every player in the marketplace has been waiting for, the road to the accountable care organization. Over 300 industry leaders gathered in Baltimore to hear just how this was going to occur, to hear the “new normal.”  Well… that’s not exactly what was heard. Although there were some mentions of changes to safe harbors and inclusion of all players, not a lot of new and different ideas were shared. While following those who were live tweeting the event, comments like “ an ACO a PHO without the H?” and “Without antitrust legislation, we’ll have only large hospital networks remaining..”  and even “..capitation is on the horizon” were the norm of the conversation.

The closer we get to implementation of this “new” model, the more similar it appears to ideas that have been tried (and failed) before. It seems we have not yet developed the appetite for a model that is new and truly different.

Apple’s iPad has been out for less than a year.   It is anticipated that within the year it will have its own category of electronics, and will outsell netbooks by a large margin within the next two years. The iPad was expected to do well, but not this well. The iPad, like healthcare reform, was promoted as something new and truly different. But the iPad was not only new and different, it was also better for the customer…at least at some things. It made doing things that customers truly wanted to do (get information fast) better and easier, even at the cost of not being as good at others (word processing, gaming, etc.).

In an article in Kaiser Health News this morning, the author outlines how many industry players are lining up to make ACO’s work – not for the patient, our customers, but for them, the providers of services. These industry insiders all seem to be afraid of what they might have to give up under this new model of care, and are looking to make sure they maximize their own gains. There may be a lesson for us to learn from our friends at Apple. If we truly want to improve our model of care, we are going to need to give some things up. Everything cannot stay the same with different titles. Different for the sake of different is not going to cut it either. If healthcare is truly going to be reformed, we need to come up with both “different” and “better” – for the providers AND for the patients. So the question remains, does the highly publicized and government-endorsed accountable care organization meet these standards? Based on those attending the listening sessions this past week, I’m afraid the jury is still out.

Ref. link here.

Free Webinar! ‘The Key Enablers to Building a Sustainable ACO’


Tuesday, November 9th, 2010

1:00 PM to 2:00PM Eastern (10:00AM – 11:00AM Pacific)

  • Five Key Accountable Care Organization Enablers
  • How to put these enablers in place in a range of health care settings
  • Acquire an understanding of new ACO legislation
  • Gain new insight in how to move to an integrated care model
  • Considerations for ongoing performance measurement
  • Understand the value of clinical information across the health ecosystem


Anne McCune
Senior Vice President Strategy and Governance
Ingenix Consulting

FTC to Develop Safe Harbors and Expedited Review Process for ACOs

Ashley McKinney Fischer, Partner, McDermott Emery Will

The FTC, CMS and OIG hosted a public workshop on October 5, 2010, featuring panel discussions on antitrust issues and an announcement from the FTC that it will develop antitrust safe harbors for accountable care organizations (ACOs), as well as an expedited review process for ACOs that do not qualify for those safe harbors.


During a workshop held by the U.S. Federal Trade Commission (FTC), the Centers for Medicare & Medicaid Services (CMS) and the Office of the Inspector General (OIG) on October 5, 2010, FTC Chairman Jon Leibowitz announced the FTC will develop antitrust safe harbors for accountable care organizations (ACOs) and an expedited review process for ACOs that do not qualify for those safe harbors.

For many providers with ACOs in development who have been looking for more definitive antitrust guidance, the announcement may be a welcome relief.   That being said, providers should know that fundamental antitrust principles will continue to apply to the formation and operation of ACOs—namely, that ACOs formed and operated to improve quality and reduce health care costs that do not create undue market concentration are pro-competitive and ACOs formed by independent, competing providers solely to raise prices are not.

This newsletter summarizes the morning sessions of the workshop concerning antitrust issues.   A future newsletter will address other regulatory issues discussed during the afternoon sessions of the workshop.


Section 3022 of the Patient Protection and Affordable Care Act (PPACA), Public Law No. 111-148, directs the secretary of the U.S. Department of Health and Human Services (HHS) to establish, no later than January 1, 2012, a shared savings program that promotes accountability for a patient population, coordinates services under Parts A and B of Medicare, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery.   Under the shared savings program, ACOs that meet quality performance standards established by the HHS secretary are eligible to receive shared savings payments.  Among other requirements, an ACO must be accountable for the quality, cost and overall care of the Medicare fee-for-service beneficiaries assigned to it.

Although popularized by PPACA, the concept of independent providers coming together and being jointly accountable for the cost and quality of care they provide is not new.  In 1996 the U.S. Department of Justice (DOJ) and FTC in the Statements of Antitrust Enforcement Policy in Health Care(Policy Statements) first recognized the concept of clinical integration as a collaborative activity among competing health care providers that may provide a sufficient basis for analyzing joint-pricing negotiations under the rule of reason and not the per se standard of illegality.  Since the passage of PPACA, many providers have wondered how the DOJ and FTC would apply the standards they developed for clinically integrated managed care contracting networks—through the Policy Statements, advisory opinions and other, subsequent guidance—to the formation and operation of ACOs.

Government Officials’ Remarks

CMS Administrator Don Berwick, MD, stated the government wants to help integrated care thrive.   He also noted the government needs to be a proper steward of the antitrust laws.  Said differently, the government wants providers to cooperate and achieve synergies without colluding. 

Leibowitz stated the promise of ACOs—improved quality and reduced costs—offers a real opportunity for health reform and explained that the government’s job is to ensure that regulations encourage ACO development while also protecting consumers.   He then announced the FTC wants to explore the development of safe harbors so providers can know when they can collaborate.  Further, the FTC will explore an expedited review process for ACOs that fall outside the safe harbors.  Leibowitz acknowledged the difficulty of establishing safe harbors—that is, categories of conduct that, absent extraordinary circumstances, the DOJ and FTC will not challenge—that displace traditional facts and circumstances analysis under the antitrust laws.  He then appealed to the provider community, stating that in order to develop effective safe harbors, the FTC needs input from providers.  Specifically, the FTC is interested in the types of activities providers may engage in through ACOs and how providers envision ACOs operating in the marketplace.

FTC Panel Discussions

The FTC conducted two moderated panel discussions.   Provider and payor representatives, as well as policy experts, participated in the sessions.

Sufficient Integration and the Rule of Reason

The first panel addressed the issue of when ACO participants should be deemed sufficiently integrated through the ACO such that their collective price negotiations should be analyzed under the rule of reason and not the per se standard of illegality.  The panel considered whether the FTC should establish a safe harbor for ACOs that satisfy CMS’ criteria for ACO participation in the Medicare program.  Under the proposal, the FTC would view any ACO qualified by CMS to be sufficiently clinically integrated for rule of reason treatment.  The panel also considered how CMS should elaborate on PPACA requirements for ACOs—namely, that an ACO be accountable for the quality, cost and overall care of the Medicare fee-for-service beneficiaries assigned to it—to ensure that ACO participants are sufficiently integrated within the meaning of the antitrust laws.

Panelists discussed possible criteria.   Many provider representatives emphasized the importance of providers’ ability to share data and the ability of the organization to capture and analyze data.  A representative from a clinically integrated independent practice association emphasized the importance of electronic tools to improve cost and care coordination.  These tools allow providers to evaluate their performance against their peers. Another representative from a clinically integrated physician-hospital organization expressed the view that the importance of the adoption and implementation of electronic health records systems (EHRS) has been overemphasized, and that his organization has been clinically integrated despite its participants not having universally adopted EHRS.  Among other initiatives, his organization created disease registries to manage patient populations.  Later, it required participants to adopt high-speed internet technology, then e-prescribing.  As a result of federal stimulus money, the provider participants in his organization are now adopting EHRS.

A trade association representative encouraged the FTC to set the criteria at a high level in recognition that there are various care integration models.  Another panelist added that the FTC criteria cannot be too specific, otherwise competition could be stifled.  These comments recognize that one of the purposes of the antitrust laws is to foster innovation such as new care delivery models.   One of the challenges for the FTC as they consider a possible safe harbor will be how to answer the industry’s call for clear standards while also allowing for flexibility in model design.

Market Power, Over-Inclusiveness and Exclusivity

The second panel discussion addressed issues of market power, over-inclusiveness and exclusivity.  The participants considered whether the FTC should adopt an antitrust safety zone pertaining to market share for ACOs.  Statement 8 of the Policy Statements contains an antitrust safety zone that applies solely to physician networks.  Under the safety zone, the DOJ and FTC will not challenge, absent extraordinary circumstances, an exclusive physician network joint venture whose physician participants share substantial financial risk and constitute 20 percent or less of the physicians in each physician specialty who practice in the relevant geographic market, or a non-exclusive physician network whose physician participants share substantial financial risk and constitute 30 percent or less of the physicians in each physician specialty who practice in the relevant geographic market.  The DOJ and FTC did not extend the antitrust safety zone for physician networks to multiprovider networks, which the DOJ and FTC analyze under Statement 9 of the Policy Statements.

The panel first addressed the issue of how large an ACO needs to be in order to deliver care effectively.   Many panelists believed that ACOs need sufficient scale in order to achieve program objectives and properly measure performance.  ACOs also need scale in order to spread out the cost of infrastructure investments, staff and other resources.   Scale also enables an ACO to spread risk effectively.  The payors on the panel addressed the extent to which they are experiencing market power issues with providers and, not surprisingly, stated that they have experienced price increases in markets where certain providers are dominant.  One of the challenges for the FTC as they consider a possible safe harbor will be how to balance the need for scale to achieve program objectives against market power concerns.

Panel participants also discussed the issue of exclusivity.   Under an exclusive ACO, provider participants negotiate with payors only through the ACO and they may not join other ACOs.  A professor expressed the concern that the advisory opinions on clinically-integrated networks the FTC has issued to date unfairly emphasize non-exclusivity.  He doubted whether a high-functioning ACO can have provider participants whose loyalty is split among competing organizations.  Several representatives stated that exclusivity is necessary to achieve the benefits of clinical integration, at least with respect to primary care physicians.  As with other concerns the FTC must balance, it will be challenged to develop ACO guidance that recognizes both the benefits and foreclosure implications of exclusivity.