Accountable Care Organizations – Navigating the Legal Minefield
The Patient Protection and Affordable Care Act (PPACA) created the Accountable Care Organization pilot program to implement measures to curb, transform, and reduce spending in the health care system through making provider organizations accountable for costs and outcomes. ACOs will likely have a tremendous impact on the future of health care. At the present time, we know very little about the specific requirements for ACOs because the CMS has yet to issue regulations defining the precise structural and functional requirements of these organizations. As healthcare organizations push forward to create compliant structures, a mastery of the existing laws governing health care integration is essential. It is important that the organization is structured to avoid the numerous antitrust, Stark law and fraud and abuse laws that must be navigated on the road to establishing an accountable care organization.
As we begin to consider the implications of the new Accountable Care Organization model, one legal issue that falls front and center is the impact of the anti-trust laws on these organizations. FTC scrutiny of provider organizations has always played a role in structuring health care organization and provider networks. The same set of laws that applied during the early integration efforts in the 1990s will apply to ACOs. I believe that in most cases, an organization that performs the tasks that will be required in order to meet CMS rules for ACOs will likely have to be integrated enough to meet the standards of the FTC. This is somewhat speculation at this point because specific regulations governing the required structure and activities of Accountable Care Organizations have not been published. However, it is difficult to envisions an organization that is structured to meet the spirit of what defines an ACO, an organization that shares risk among its various portions of the health care system and makes providers accountable for outcomes and cost, is not meeting the integration tests of the FTC. ACOs should not ignore the antitrust laws, but in terms of the level of integration, the same antitrust laws that have governed integration efforts since the 1990s should examined and complied with. The FTC has issued a number of advisory opinions on integration over the years that are of guidance in this area.
Another antitrust issue that is yet to be closely examined is the impact of the anti-monopolization provisions of antitrust laws on ACOs. To me this is the area of antitrust laws that raise the more difficult questions. All we can really do at this point is identify the issue. Will ACOs be permitted or required to maintain enough market power to raise monopolization concerns? Monopolization concerns could impact an ACO by making it susceptible to claims that the ACO is using its market power to demand higher rates of payment. This would seems to be directly counter to the purpose for creating ACOs in the first place. Issues may also be raised by providers who are caught outside of the ACO if the market share of the ACO grows to monopoly strength, These are items that should be considered by health care providers and organizations who are positioning themselves to qualify as ACOs. As CMS begins to provide us with more detail regarding the required structure and activities of ACOs, we will need to keep these antitrust law considerations in mind. It seems that at this point CMS is communicating with the FTC concerning these issues and it is possible that some of these open questions may be addressed through the process of developing regulations.
The Health Law Blog will continue to cover issues related to Accountable Care Organization, so grab our RSS feed to check back often for additional articles concerning the federal law implications of structuring ACOs.