Antitrust Implications of Clinically-Integrated Managed Care Contracting Networks and Accountable Care Organizations

The Patient Protection and Affordable Care Act (“PPACA”) established various mechanisms to make healthcare providers more accountable for both the cost and quality of the services they provide. One of these mechanisms is the establishment of a new class of Medicare provider-the Accountable Care Organization (“ACO”). An ACO is accountable for the quality, cost, and overall care for a defined set of Medicare beneficiaries.

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 Department of Justice (“DOJ”) and Federal Trade Commission (“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.

Following a decline in capitation and other traditional risk-based contracts in the late 90s, some physician-contracting networks pursued clinical integration as a means to continue joint contracting on behalf of their independent, competing members. However, the significant resource investment required for these programs-in electronic health records systems (“EHRS”), for example-and the lack of data to monitor and assess performance goals, coupled with the uncertainty of payor receptivity to these types of programs, limited their widespread adoption. Government incentives for the adoption of EHRS, along with the development of pay-for-performance programs in the commercial insurance marketplace, have reduced these barriers. With the shared-savings program incentive provisions of PPACA, providers who coordinate their care to meet cost and quality objectives now have an additional incentive to jointly pursue these efficiency objectives.

This article explores how the DOJ and FTC (collectively, the “Agencies”) have treated clinically-integrated managed care contracting networks under the antitrust laws, and how the Agencies are likely to apply those concepts to ACOs.