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COVINGTON & BURLING LLP

her data shared with other ACO providers. However, the beneficiary may still be assigned to the ACO, and his or her information will still be used in evaluating the ACO’s quality measures.

  • V.

    ANTITRUST ENFORCEMENT

  • A.

    Potential Antitrust Issues Surrounding ACOs

Because ACOs are by definition agreements among various health care providers, they may in some circumstances raise concerns under the federal antitrust laws. The FTC and DOJ share jurisdiction over enforcement of the federal antitrust laws in the healthcare sector. In monitoring the formation and operation of ACOs, these agencies wish to strike a balance between providing clear guidance for ACO participants and retaining the ability to protect consumers from anticompetitive practices. Thus, the agencies have issued a Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations (Policy Statement), which is applicable to otherwise independent providers and provider groups that seek to participate or do participate in the Program. The agencies are accepting public comments on the Policy Statement through May 31, 2011.

B. ACOs That Meet the CMS Criteria for Program Participation Will Be Analyzed Under the Rule of Reason

Naked price-fixing and market allocation agreements are per se illegal under the antitrust law. However, certain agreements among competitors will be analyzed under the more lenient rule of reason if the collaboration includes financial or clinical integration among the participants and such integration is reasonably necessary to the purpose of the collaboration. Rule of reason analysis examines the potential anticompetitive effects of a potential collaboration and weighs those against the procompetitive benefits from decreased costs, increased innovation or other efficiencies.

The Policy Statement provides that ACOs that qualify for participation in the Program will be deemed sufficiently integrated to be analyzed under the rule of reason. As justification for that policy, the agencies relied on the rigorous requirements that CMS imposes for Program participation and the extensive monitoring of Program participants’ cost savings. Further, if the ACO’s activities in the commercial market utilize the same structure developed for participation in the Program, it will be considered clinically integrated with respect to those activities as well.

C. Analysis of ACOs Eligible for Program Participation

The agencies look to the ACO’s market share on a service-by-service basis in each ACO participants’ Primary Service Area (PSA) as an initial screen for potential competitive concerns. A PSA consists of “the lowest number of contiguous postal zip codes from which the ACO participant draws 75 percent of its patients.” In general, the Policy Statement notes that higher market shares are more likely to lead to anticompetitive concerns. The initial market share screen determines what further review, if any, is required before an ACO may participate in the Program.

D. Safety Zones for ACOs with Limited Market Share

The Policy Statement establishes a proposed safety zone for ACOs. If an ACO falls within the safety zone, the agencies will not challenge the ACO, absent extraordinary circumstances. To be in the safety zone, an ACO’s independent participants that provide the same service must together command 30 percent or less of the market for that service in each participant’s PSA. ACOs in rural areas may exceed the 30 percent threshold and still qualify for the safety zone under certain conditions. Any hospital or ambulatory surgery center must be non-exclusive to the ACO, regardless

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