[Federal Register Volume 76, Number 75 (Tuesday, April 19, 2011)]
[Notices]
[Pages 21894-21902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9466]
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FEDERAL TRADE COMMISSION
Department of Justice
Antitrust Division
Proposed Statement of Antitrust Enforcement Policy Regarding
Accountable Care Organizations Participating in the Medicare Shared
Savings Program
AGENCY: FTC; Antitrust Division, DOJ.
ACTION: Notice with comment period.
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SUMMARY: The FTC and DOJ (the ``Agencies'') are proposing an
enforcement policy regarding the application of the antitrust laws to
health care collaborations among otherwise independent providers and
provider groups, formed after March 23, 2010, the date on which the
Patient Protection and Affordable Care Act was enacted, that seek to
participate, or have otherwise been approved to participate, as
accountable care organizations (ACOs) under the Medicare Shared Savings
Program, Section 3022 of the Affordable Care Act (Patient Protection
and Affordable Care Act, Public Law 111-48 (2010) and the Health Care
and Education Reconciliation Act of 2010, Public Law 111-52 (2010)).
DATES: Public comments must be received on or before May 31, 2011.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form, by following the instructions in the
Request for Comment part of the SUPPLEMENTARY INFORMATION section
below.
FOR FURTHER INFORMATION CONTACT: Daniel Gilman, (202) 326-3136 (FTC) or
Gail Kursh, (202) 307-5799 (DOJ).
SUPPLEMENTARY INFORMATION:
Proposed Statement of Antitrust Enforcement Policy Regarding
Accountable Care Organizations Participating in the Medicare Shared
Savings Program
I. Introduction
The Patient Protection and Affordable Care Act and the Health Care
and Education Reconciliation Act of 2010 (collectively, the
``Affordable Care Act'') seek to improve the quality and reduce the
costs of health care services in the United States by, among other
things, encouraging physicians, hospitals, and other health care
providers to become accountable for a patient population through
integrated health care delivery systems.\1\ One delivery system reform
is
[[Page 21895]]
the Affordable Care Act's Medicare Shared Savings Program (the ``Shared
Savings Program''), which promotes the formation and operation of
Accountable Care Organizations (``ACOs'' \2\) to serve Medicare fee-
for-service beneficiaries.\3\ Under this provision, ``groups of
providers * * * meeting the criteria specified by the [Department of
Health and Human Services] Secretary may work together to manage and
coordinate care for Medicare * * * beneficiaries through an [ACO].''
\4\ An ACO may share in some portion of any savings it creates if the
ACO meets certain quality performance standards established by the
Secretary of Health and Human Services through the Centers for Medicare
and Medicaid Services (``CMS''). The Affordable Care Act requires an
ACO that wishes to participate in the Shared Savings Program to enter
into an agreement with CMS for not less than three years.\5\
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\1\ Patient Protection and Affordable Care Act, Public Law 111-
48 (2010); the Health Care and Education Reconciliation Act of 2010,
Public Law 111-52 (2010).
\2\ As used in this document, ``ACO'' refers to Accountable Care
Organizations under the Medicare Shared Savings Program, which also
may operate in commercial markets. Patient Protection and Affordable
Care Act, Public Law 111-48, section 2706 (2010).
\3\ Id.
\4\ Id.
\5\ Id.
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Recent commentary suggests that health care providers are more
likely to integrate their care delivery for Medicare beneficiaries
through ACOs if they can also use the ACOs for commercially insured
patients.\6\ This preference to operate in both the Medicare and
commercial markets appears to reflect the significant resources and
time required to integrate independent provider practices, a desire to
provide more patients--not just Medicare patients--with the benefits of
integrated health care, and the intent to develop new delivery and
payment systems with commercial purchasers of health care services
(including health insurance plans and other private payers).
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\6\ Fed. Trade Comm'n & Dep't of Health and Human Serv.,
Workshop Regarding Accountable Care Organizations, and Implications
Regarding Antitrust, Physician Self-Referral, Anti-Kickback, and
Civil Monetary Penalty (CMP) Laws (Oct. 5, 2010).
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The Federal Trade Commission and the Antitrust Division of the
Department of Justice (the ``Agencies'') recognize that ACOs may
generate opportunities for health care providers to innovate in both
the Medicare and commercial markets and achieve for many consumers the
benefits Congress intended for Medicare beneficiaries through the
Shared Savings Program. Therefore, to maximize and foster opportunities
for ACO innovation, the Agencies wish both to clarify the antitrust
analysis of newly formed collaborations among independent providers
that seek to become ACOs in the Shared Savings Program \7\ and to
coordinate the antitrust analysis with the CMS review of those ACO
applications. The Agencies recognize that not all such ACOs are likely
to benefit consumers, and under certain conditions ACOs could reduce
competition and harm consumers through higher prices or lower quality
of care. Thus, the antitrust analysis of ACO applicants to the Shared
Savings Program must ensure that ACOs have an opportunity to achieve
substantial efficiencies, yet the analysis must remain sufficiently
rigorous to protect both Medicare beneficiaries and commercially
insured patients from potential anticompetitive harm.
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\7\ ``Newly formed competitor collaborations'' are those formed
in whole or in part after March 23, 2010, the date on which the
Patient Protection and Affordable Care Act was enacted. Patient
Protection and Affordable Care Act, Public Law 111-48 (2010).
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To achieve these goals, the Agencies have developed this Statement
of Antitrust Enforcement Policy Regarding Accountable Care
Organizations Participating in the Medicare Shared Savings Program (the
``Policy Statement''). The Policy Statement is intended to ensure that
health care providers have the antitrust clarity and guidance needed to
form procompetitive ACOs that participate in both the Medicare and
commercial markets. The Policy Statement describes (l) The ACOs to
which the Policy Statement will apply; \8\ (2) when the Agencies will
apply rule of reason treatment to those ACOs; (3) an antitrust safety
zone; (4) the Agency review of ACOs exceeding a 50 percent share
threshold mandated by CMS under the Shared Savings Program; and (5)
options for ACOs to obtain additional antitrust certainty if they are
outside the safety zone and below the mandatory review threshold.\9\
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\8\ The analytical principles underlying this Policy Statement
would also apply to various ACO initiatives undertaken by the
Innovation Center within CMS so long as those ACOs are substantially
clinically or financially integrated.
\9\ This Policy Statement provides guidance to allow ACOs to
determine whether they are likely to present competitive concerns.
It does not reflect the full analysis that the Agencies may use in
evaluating ACOs or any other transaction or course of conduct.
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II. Applicability of the Policy Statement
This Policy Statement applies to collaborations among otherwise
independent providers and provider groups,\10\ formed after March 23,
2010, that seek to participate, or have otherwise been approved to
participate, in the Shared Savings Program. For ease of reference, we
refer to such collaborations as ACOs, although they may not yet have
been approved to participate as ACOs in the Shared Savings Program. We
refer to the otherwise independent providers and provider groups that
constitute the ACO as ACO participants. This Policy Statement,
including its provisions for streamlined analysis, does not apply to
mergers. Merger transactions, including transactions that meet the
criteria set forth in Section 1.3 of the Competitor Collaboration
Guidelines,\11\ will be evaluated under the Agencies' Horizontal Merger
Guidelines.\12\
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\10\ A ``collaboration'' comprises a set of agreements, other
than merger agreements, among otherwise independent entities jointly
to engage in economic activity, and the resulting economic activity.
U.S. Dep't of Justice & Fed. Trade Comm'n, Antitrust Guidelines for
Collaborations Among Competitors Sec. 1.1 (2000), available at
http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf.
\11\ U.S. Dep't of Justice & Fed. Trade Comm'n, Antitrust
Guidelines for Collaborations Among Competitors Sec. 1.3 (2000),
available at http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf.
\12\ U.S. Dep't of Justice & Fed. Trade Comm'n, Horizontal
Merger Guidelines (rev. ed. 2010), available at http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf.
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III. The Agencies Will Apply Rule of Reason Analysis to ACOs That Meet
Certain Conditions
The antitrust laws treat naked price-fixing and market-allocation
agreements among competitors as per se illegal. Joint price agreements
among competing health care providers are evaluated under the rule of
reason, however, if the providers are financially or clinically
integrated and the agreement is reasonably necessary to accomplish the
procompetitive benefits of the integration.
A rule of reason analysis evaluates whether the collaboration is
likely to have substantial anticompetitive effects and, if so, whether
the collaboration's potential procompetitive efficiencies are likely to
outweigh those effects. The greater the likely anticompetitive effects,
the greater the likely efficiencies must be to pass muster under the
antitrust laws. The Agencies have articulated the standards for both
financial and clinical integration in various policy statements,
speeches, business reviews, and advisory opinions. For example, the
Agencies' Statements of Antitrust Enforcement Policy in Health Care
(the ``Health Care Statements'') explain that where participants in
physician or multiprovider joint ventures have
[[Page 21896]]
agreed to share substantial financial risk as defined in the Health
Care Statements, their risk-sharing arrangement generally establishes
both an overall efficiency goal for the venture and the incentives for
the participants to meet that goal. Accordingly, the setting of price
is integral to the venture's use of such an arrangement and therefore
warrants evaluation under the rule of reason.\13\ The Health Care
Statements provide examples of financial risk-sharing arrangements that
satisfy this standard, but also recognize that other acceptable
financial risk-sharing arrangements might develop.\14\
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\13\ Dep't of Justice & Fed. Trade Comm'n, Statements of
Antitrust Enforcement Policy in Health Care (1996) [hereinafter
Health Care Statements], available at http://www.ftc.gov/reports/hlth3s.pdf.
\14\ Id.
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The Health Care Statements further explain that provider joint
ventures also may involve clinical integration sufficient to ensure
that the venture is likely to produce significant efficiencies.\15\
Clinical integration can be evidenced by the joint venture implementing
an active and ongoing program to evaluate and modify practice patterns
by the venture's provider participants and to create a high degree of
interdependence and cooperation among the providers to control costs
and ensure quality.\16\ Federal Trade Commission staff advisory
opinions discuss evidence sufficient to demonstrate clinical
integration in specific factual circumstances.\17\
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\15\ Id. at 83-87, 110-11.
\16\ See, e.g., Christine A. Varney, Assistant Attorney Gen.,
Antitrust Div., U.S. Dep't of Justice, Antitrust and Healthcare at
12 (May 24, 2010), available at http://www.justice.gov/atr/public/speeches/258898.pdf.
\17\ See Fed. Trade Comm'n, Advisory Opinions (1982-2010),
available at http://www.ftc.gov/bc/healthcare/industryguide/advisory.htm#2010.
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The Affordable Care Act provides that CMS may approve ACOs that
meet certain eligibility criteria, including (1) A formal legal
structure that allows the ACO to receive and distribute payments for
shared savings; (2) a leadership and management structure that includes
clinical and administrative processes; (3) processes to promote
evidence-based medicine and patient engagement; (4) reporting on
quality and cost measures; and (5) coordinated care for
beneficiaries.\18\ CMS has further defined these eligibility criteria
through proposed regulations.\19\
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\18\ Patient Protection and Affordable Care Act, Public Law 111-
48, section 3022 (2010).
\19\ CMS Notice of Proposed Rulemaking, Medicare Program;
Medicare Shared Savings Program: Accountable Care Organizations
(2011) [hereinafter CMS NPRM on ACOs].
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By contrast, the Agencies have not previously listed specific
criteria required to establish clinical integration, but instead have
responded to detailed proposals from health care providers who have
decided how they wish to integrate their health care delivery systems
to improve quality and lower costs.\20\ The Agencies have wished to
avoid dictating prescriptions for how clinical integration should take
place. Nonetheless, the Agencies recognize that health care providers
seeking to create ACOs in the context of the Shared Savings Program
could benefit from greater certainty in evaluating whether an ACO that
satisfies the CMS eligibility criteria could be subject to an antitrust
investigation and potential challenge as per se illegal.
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\20\ See generally FTC Staff Advisory Opinions (2002-Present),
available at http://www.ftc.gov/bc/healthcare/industryguide/opinionguidance.htm.
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The Agencies have determined that CMS's proposed eligibility
criteria are broadly consistent with the indicia of clinical
integration that the Agencies previously set forth in the Health Care
Statements and identified in the context of specific proposals for
clinical integration from health care providers.\21\ The Agencies also
have determined that organizations meeting the CMS criteria for
approval as an ACO are reasonably likely to be bona fide arrangements
intended to improve the quality, and reduce the costs, of providing
medical and other health care services through their participants'
joint efforts. Further, if a CMS-approved ACO provides the same or
essentially the same services in the commercial market, the Agencies
have determined that the integration criteria are sufficiently rigorous
that joint negotiations with private-sector payers will be treated as
subordinate and reasonably related to the ACO's primary purpose of
improving health care services.
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\21\ See, e.g., Tristate Health Partners, Inc. Advisory Opinion
from FTC Staff (April 13, 2009) (evaluating Tristate Health
Partners' proposal and stating that, if implemented as proposed,
Federal Trade Commission staff would not recommend that the
Commission challenge the proposed program), available at http://www.ftc.gov/os/closings/staff/090413tristateaoletter.pdf.
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Further, CMS will collect and evaluate cost, utilization, and
quality metrics annually relating to each ACO's performance in the
Shared Savings Program over the three-year agreement period. This
extensive monitoring of cost, utilization, and quality metrics will
help the Agencies determine the extent to which the proposed CMS
eligibility criteria in fact lead to cost savings and improved health
care quality and may help inform the Agencies' future analysis of ACOs
and other provider organizations.
Therefore, the Agencies will provide rule of reason treatment to an
ACO if, in the commercial market, the ACO uses the same governance and
leadership structure and the same clinical and administrative processes
as it uses to qualify for and participate in the Shared Savings
Program. This rule of reason treatment will apply to the ACO for the
duration of its participation in the Shared Savings Program. The
Agencies further note that CMS's proposed regulations allow an ACO to
propose alternative ways to establish clinical integration, and the
Agencies are willing to consider other proposals for clinical
integration as well.
IV. The Agencies' Antitrust Analysis of ACOs That Meet CMS Eligibility
Criteria
As an initial step in determining whether an ACO is likely to raise
competitive concerns, the Agencies will use a streamlined analysis that
evaluates the ACO's share of services in each ACO participant's Primary
Service Area (``PSA'').\22\ The higher the PSA share, the greater the
risk the ACO will be anticompetitive. An ACO with high PSA shares may
reduce quality, innovation, and choice for Medicare and commercial
patients, in part by reducing the ability of competing equally or more
efficient ACOs to form. High PSA shares also may allow the ACO to raise
prices to commercial health plans above competitive levels. On the
other hand, if there are already other competing ACOs, or sufficient
suitable unaffiliated physicians and hospitals to form competing ACOs,
it is less likely that the ACO would raise significant competitive
concerns.
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\22\ While a PSA does not necessarily constitute a relevant
antitrust geographic market, it nonetheless provides a useful tool
for evaluating potential competitive effects.
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The following Sections describe how the Agencies will treat ACO
applicants that meet CMS eligibility criteria for the Shared Savings
Program, based on different ranges of PSA shares.\23\ Depending on an
ACO's range of PSA shares, CMS may mandate, or an ACO may choose to
seek, an expedited antitrust review. An ACO will submit its request for
expedited review to both Agencies, and the Agencies will then determine
which Agency will be the reviewing Agency and will notify the applicant
of such.\24\ The Agencies shall
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establish a Federal Trade Commission/Department of Justice ACO Working
Group to collaborate and discuss issues arising out of the ACO reviews.
This process will allow ACOs to rely on the expertise of both Agencies
and ensure efficient, cooperative, and expeditious reviews.\25\
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\23\ We expect ACOs to maintain, for the duration of the
agreement period with CMS, the data on which they relied to
calculate their PSA shares.
\24\ The provisions regarding non-disclosure of competitively
sensitive or business confidential information set forth in 28 CFR
50.6 (2010) (U.S. Department of Justice business review letters) and
16 CFR 1.1-1.4 (2010) (Federal Trade Commission advisory opinions)
would generally apply to the expedited review process.
\25\ For example, it has been standard practice for the Agencies
to share with each other their proposed health care business review
and staff advisory opinion letters before issuing them in final form
to ensure application of consistent standards of antitrust review.
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A. The Antitrust Safety Zone for ACOs in the Shared Savings Program
This Section sets forth an antitrust safety zone for ACOs that meet
the CMS eligibility criteria to participate in the Shared Savings
Program and are highly unlikely to raise significant competitive
concerns. The Agencies will not challenge ACOs that fall within the
safety zone, absent extraordinary circumstances. ACOs in the safety
zone, therefore, have no obligation to contact the Agencies.
The Agencies emphasize that ACOs outside the safety zone are not
presumptively unlawful. Indeed, ACOs outside the safety zone frequently
may be procompetitive and lawful. Rather, the creation of a safety zone
simply reflects a view that ACOs that fall within it are highly
unlikely to raise significant competitive concerns, so no initial
competitive review is necessary.
For an ACO to fall within the safety zone, independent ACO
participants (e.g., physician group practices) that provide the same
service (a ``common service'') must have a combined share of 30 percent
or less of each common service in each participant's PSA, wherever two
or more ACO participants provide that service to patients from that
PSA.\26\ The PSA for each service is defined as ``the lowest number of
contiguous postal zip codes from which the [ACO participant] draws at
least 75 percent of its [patients]'' for that service.\27\
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\26\ For example, if two physician group practices form an ACO
and each includes cardiologists and oncologists, cardiology and
oncology would be common services. If, on the other hand, one
physician group practice consists only of cardiologists and the
other only of oncologists, then there are no common services and the
ACO falls within the safety zone regardless of its share, subject to
the dominant provider limitation, described below.
\27\ Medicare Program: Physicians' Referrals to Health Care
Entities With Which They Have Financial Relationships (Phase II), 69
FR 16094 (Mar. 26, 2004).
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Any hospital or ambulatory surgery center (``ASC'') participating
in an ACO must be non-exclusive to the ACO to fall within the safety
zone, regardless of its PSA share. In a non-exclusive ACO, a hospital
or ASC is allowed to contract individually or affiliate with other ACOs
or commercial payers.\28\ The safety zone for physician and other
provider services (regardless of whether the physicians or other
providers are hospital employees) does not differ based on whether the
physicians or other providers are exclusive or non-exclusive to the
ACO, unless they fall within the rural exception or dominant provider
limitation described below.
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\28\ The ACO must be non-exclusive in fact and not just in name.
The Health Care Statements explain the indicia of non-exclusivity
that the Agencies consider relevant to this evaluation. Health Care
Statements, supra note 9, at 66-67.
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The Appendix to this Policy Statement describes how, and identifies
the data sources available, to calculate an ACO's shares of services
(i.e., physician specialties, major diagnostic categories (``MDCs'')
for inpatient facilities, and outpatient categories for outpatient
facilities) \29\ in the relevant PSAs and provides examples.
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\29\ While these services do not necessarily constitute relevant
antitrust product markets, they nonetheless provide a useful tool
for evaluating potential competitive effects.
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Rural Exception: An ACO may include one physician per specialty
from each rural county (as defined by the U.S. Census Bureau) on a non-
exclusive basis and qualify for the safety zone, even if the inclusion
of these physicians causes the ACO's share of any common service to
exceed 30 percent in any ACO participant's PSA for that service.\30\
Likewise, an ACO may include Rural Hospitals \31\ on a non-exclusive
basis and qualify for the safety zone, even if the inclusion of a Rural
Hospital causes the ACO's share of any common service to exceed 30
percent in any ACO participant's PSA for that service.
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\30\ The definition and list of rural counties are available at
http://www.census.gov/geo/www/ua/2010urbanruralclass.html.
\31\ For the purposes of this Policy Statement, a Rural Hospital
is defined as a Sole Community Hospital or a Critical Access
Hospital. A Sole Community Hospital is a hospital that is paid under
the Medicare hospital inpatient prospective payment system and is
either located more than 35 miles from other like hospitals or is
located in a rural area, and meets the criteria for Sole Community
Hospital status as specified at 42 CFR 412.92. See also https://www.cms.gov/MLNProducts/downloads/SoleCommHospfctsht508-09.pdf. A
Critical Access Hospital is a rural community hospital that has been
certified as a Medicare Critical Access Hospital, based on the
criteria described in 42 CFR part 485 subpart F.
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Dominant Provider Limitation: This limitation applies to any ACO
that includes a participant with a greater than 50 percent share in its
PSA of any service that no other ACO participant provides to patients
in that PSA. Under these conditions, the ACO participant (a ``dominant
provider'') must be non-exclusive to the ACO to fall within the safety
zone.\32\ In addition, to fall within the safety zone, an ACO with a
dominant provider cannot require a commercial payer to contract
exclusively with the ACO or otherwise restrict a commercial payer's
ability to contract or deal with other ACOs or provider networks.
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\32\ For example, a physician group participating in the ACO may
comprise a specialty not found in any other ACO participant. In this
case, the ACO may be eligible for the safety zone even if the
physician group's share exceeds 50 percent, but only if the
physician group participates in the ACO on a non-exclusive basis and
the ACO does not restrict a commercial payer's ability to contract
or deal with other ACOs or provider groups.
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The safety zone will remain in effect for the duration of an ACO's
agreement with CMS, unless there is a significant change to the ACO's
provider composition. An ACO that is not within the rural exception and
later exceeds the 30 percent share limitation solely because it
attracts more patients will not lose its safety zone status.
B. Mandatory Antitrust Agency Review of ACOs Exceeding the 50 Percent
PSA Share Threshold
As described in the CMS regulations, an ACO that does not qualify
for the rural exception cannot participate in the Shared Savings
Program if its share exceeds 50 percent for any common service that two
or more independent ACO participants provide to patients in the same
PSA, unless, as part of the CMS application process, the ACO provides
CMS with a letter from one of the Agencies stating that the reviewing
Agency has no present intention to challenge or recommend challenging
the ACO under the antitrust laws.\33\ This 50 percent share threshold
for mandatory review provides a valuable indication of the potential
for competitive harm from ACOs with high PSA shares. When conducting a
review, however, the Agencies will consider any information or
alternative data suggesting that the PSA shares may not reflect the
ACO's likely market power, and also will consider any substantial
procompetitive justification for why the ACO needs that proposed share
to provide high-quality,
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cost-effective care to Medicare beneficiaries and patients in the
commercial market.
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\33\ CMS NPRM on ACOs. When the Federal Trade Commission is the
reviewing Agency, Commission staff will perform the ACO review
pursuant to the Commission's authorization of its staff in 16 CFR
1.1(b). When the Antitrust Division is the reviewing Agency, the
Assistant Attorney General in charge of the Antitrust Division or
her delegate will sign the letter. 28 CFR 50.6.
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The Agencies are committed to providing an expedited review of ACOs
that exceed the 50 percent PSA share threshold. To obtain this
expedited review, however, the ACO must submit the following documents
and information to the reviewing Agency:\34\
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\34\ The ACO must represent in writing that it has undertaken a
good-faith search for the documents and information specified in
this Policy Statement and, where applicable, provided all responsive
material. Moreover, the Agencies may request additional documents
and information where necessary to evaluate the ACO.
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1. The application and all supporting documents that the ACO plans
to submit, or has submitted, to CMS or that CMS requires the ACO to
retain as part of the Shared Savings Program application process
2. Documents or agreements relating to the ability of the ACO
participants to compete with the ACO, either individually or through
other ACOs or entities, or to any financial or other incentives to
encourage ACO participants to contract with CMS or commercial payers
through the proposed ACO
3. Documents discussing the ACO's business strategies or plans to
compete in the Medicare and commercial markets and the ACO's likely
impact on the prices, cost, or quality of any service provided by the
ACO to Medicare beneficiaries, commercial health plans, or other payers
4. Documents showing the formation of any ACO or ACO participant
that was formed in whole or in part, or otherwise affiliated with the
ACO, after March 23, 2010
5. Information sufficient to show the following:
a. The ACO's PSA share calculations for each common service, as
described in the Appendix, and the ACO's PSA share calculations for
each common service provided to commercial customers where those shares
differ significantly from the PSA share calculations based on Medicare
data (e.g., PSA share calculations for pediatricians or obstetricians)
b. Restrictions that prevent ACO participants from obtaining
information regarding prices that other ACO participants charge
commercial payers that do not contract through the ACO
c. The identity, including points of contact, of the five largest
commercial health plans or other payers, actual or projected, for the
ACO's services
d. The identity of any other existing or proposed ACO known to
operate, or known to plan to operate, in any PSA in which the ACO will
provide services
All of the above documents and information must be received by the
reviewing Agency at least 90 days before the last day on which CMS has
stated that it will accept ACO applications to participate in the
Shared Savings Program for the relevant calendar year.\35\
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\35\ For example, if CMS sets November 1, 2011, as the last date
for accepting applications to begin participation in the Shared
Savings Program on January 1, 2012, then the Agency must receive all
of the above documents and information on or before August 3, 2011.
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Within 90 days of receiving all of the above documents and
information, the reviewing Agency will advise the ACO that the Agency
1. has no present intent to challenge or recommend challenging the
ACO, as described in the documents provided and, if appropriate,
conditioned on the ACO's written agreement to take specific steps to
remedy concerns raised by the Agency; or
2. is likely to challenge or recommend challenging the ACO if it
proceeds. Pursuant to CMS regulations, CMS will not approve for the
Shared Savings Program an ACO that has received a letter stating that
the reviewing Agency is likely to challenge or recommend challenging
the ACO if it proceeds.\36\ ACOs that exceed the 50 percent threshold
can reduce the likelihood of antitrust concern by avoiding the conduct
set forth in Section IV.C (1) through (5) below.
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\36\ Moreover, if at any time during the ACO's agreement period
with CMS there is a significant change to the ACO's provider
composition such that the ACO exceeds the 50 percent threshold or is
materially different than what was initially reviewed, the ACO must
seek antitrust review as set forth above. However, an ACO that
exceeds the 50 percent threshold solely because it attracts more
patients will not be required to seek antitrust review. CMS NPRM on
ACOs.
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C. ACOs Below the 50 Percent Mandatory Review Threshold and Outside the
Safety Zone
ACOs that are outside the safety zone and below the 50 percent
mandatory review threshold frequently may be procompetitive. The key
issue is whether the ACO, on balance, will provide consumers with high-
quality, cost-effective health care or, instead, increase price and
reduce consumer choice and value. An ACO in this category that does not
impede the functioning of a competitive market and that engages in
procompetitive activities will not raise competitive concerns and may
proceed without Agency scrutiny. As is current practice, however, if it
appears that an ACO's formation or conduct may be anticompetitive, one
of the Agencies may investigate the ACO and, if appropriate, take
enforcement action at any time during the ACO's participation in the
Shared Savings Program.
To provide additional antitrust guidance for ACOs that fall below
the mandatory review threshold and outside the safety zone, the
Agencies identify five types of conduct that an ACO can avoid to reduce
significantly the likelihood of an antitrust investigation.
Specifically, the Agencies believe that an ACO in this category is
highly unlikely to present competitive concerns if the ACO avoids the
conduct set forth in (1) through (5) below. Avoiding the first four
types of conduct is important to facilitate payers' ability to offer
insurance products that differentiate among providers based on cost and
quality. Avoiding the final type of conduct ensures that the ACO does
not facilitate collusion involving ACO participants that contract with
payers outside the ACO.
1. Preventing or discouraging commercial payers from directing or
incentivizing patients to choose certain providers, including providers
that do not participate in the ACO, through ``anti-steering,''
``guaranteed inclusion,'' ``product participation,'' ``price parity,''
or similar contractual clauses or provisions
2. Tying sales (either explicitly or implicitly through pricing
policies) of the ACO's services to the commercial payer's purchase of
other services from providers outside the ACO (and vice versa),
including providers affiliated with an ACO participant (e.g., an ACO
may not require a purchaser to contract with all the hospitals in the
same network as the hospital that belongs to the ACO)
3. With an exception for primary care physicians, contracting with
other ACO physician specialists, hospitals, ASCs, or other providers on
an exclusive basis, thus preventing or discouraging them from
contracting outside the ACO, either individually or through other ACOs
or provider networks
4. Restricting a commercial payer's ability to make available to
its health plan enrollees cost, quality, efficiency, and performance
information to aid enrollees in evaluating and selecting providers in
the health plan, if that information is similar to the cost, quality,
efficiency, and performance measures used in the Shared Savings Program
5. Sharing among the ACO's provider participants competitively
sensitive pricing or other data that they could use to set prices or
other terms for services they provide outside the ACO
[[Page 21899]]
An ACO that desires further certainty regarding the application of
the antitrust laws to its formation and planned operation can seek an
expedited review from one of the Agencies, similar to the mandatory
review for ACOs above the 50 percent threshold described in Section
IV.B above. The reviewing Agency will complete the review within 90
days of receiving all of the necessary documents and information (as
described in the mandatory review above and according to the same
deadlines) and will inform the ACO of the outcome of the review. The
reviewing Agency will advise the ACO of the Agency's intention
according to the options described in Section IV.B above. Pursuant to
CMS regulations, CMS will not approve for the Shared Savings Program an
ACO that has received a letter stating that the reviewing Agency is
likely to challenge or recommend challenging the ACO if it
proceeds.\37\
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\37\ CMS NPRM on ACOs.
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Appendix
This Appendix explains how to calculate the PSA shares of common
services discussed in this Policy Statement.\38\ There are three steps:
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\38\ Any ACO participant that wants to determine whether it
meets the dominant provider limitation of the safety zone should
calculate its PSA share in a similar manner.
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1. Identify each service provided by at least two independent ACO
participants (i.e., each common service). A service is defined as
follows:
a. For physicians, a service is the physician's primary specialty,
as designated on the physician's Medicare Enrollment Application. Each
specialty is identified by its Medicare Specialty Code (``MSC''), as
defined by CMS.\39\
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\39\ CMS will make publicly available the most current list of
applicable specialties. Specialty Codes 01 (general practice), 08
(family practice), 11 (internal medicine), and 38 (geriatric
medicine) are considered ``Primary Care'' specialties, and are
treated as a single service for the purposes of this Policy
Statement.
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b. For inpatient facilities (e.g., hospitals), a service is an
MDC.\40\
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\40\ CMS will make publicly available the most current list of
MDCs.
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c. For outpatient facilities (e.g., ASCs or hospitals), a service
is an outpatient category, as defined by CMS.\41\
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\41\ CMS will make publicly available a list of applicable
outpatient categories as well as data necessary to assign procedure
codes to the appropriate category.
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2. Identify the PSA for each common service for each participant
(e.g., physician group, inpatient facility, or outpatient facility) in
the ACO. For each common service and each participant, the PSA is
defined as the lowest number of contiguous postal zip codes from which
the participant draws at least 75 percent of its patients for that
service.\42\
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\42\ This PSA calculation is based on the Stark II regulations.
Medicare Program: Physicians' Referrals to Health Care Entities With
Which They Have Financial Relationships (Phase II), 69 FR 16094
(Mar. 26, 2004).
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3. Calculate the ACO's PSA share for each common service in each
PSA from which at least two ACO participants serve patients for that
service. For physician services, the ACO applicant should calculate its
shares of Medicare fee-for-service allowed charges (i.e., the amount
that a provider is entitled to receive for the service provided) during
the most recent calendar year for which data are available. For
outpatient services, the ACO applicant should calculate its shares of
Medicare fee-for-service payments during the most recent calendar year
for which data are available. CMS will make public the data necessary
to identify the full range of services and the aggregate fee-for-
service allowed charges or payments for each service, by zip code. For
inpatient services, the ACO applicant should calculate its shares of
inpatient discharges, using state-level all-payer hospital discharge
data where available, for the most recent calendar year for which data
are available. For ACOs located in a state where all-payer hospital
discharge data are not available, the ACO applicant should calculate
its shares of Medicare fee-for-service payments during the most recent
federal fiscal year for which data are available (CMS will make public
the necessary data). For those services that are rarely used by
Medicare beneficiaries (e.g., pediatrics, obstetrics, and neonatal
care), the ACO may use other available data to determine the relevant
shares. For example, for services where Medicare data are not
applicable, data on the number of actively participating physicians
within the specialty and within the PSA may be a reasonable alternative
for the purposes of calculating shares of physician services.
Example of How To Calculate an ACO's PSA Shares
The following example illustrates how to calculate the ACO's
relevant PSA shares. Assume that two independent physician practices,
two independent hospitals, and an ASC propose to form an ACO. For
purposes of this example, further assume that the hospitals do not
directly employ physicians. If they do, then services provided by the
hospitals' employed physicians would need to be taken into account in
calculating the ACO's shares for each common service.
For the physician groups:
1. Identify the Physician Groups' common MSCs. In this example,
Physician Group A (``PG A'') has physicians with general surgery (MSC
02) and orthopedic surgery specialties (MSC 20). Physician Group B
(``PG B'') has physicians with orthopedic surgery (MSC 20) and
cardiology (MSC 06) specialties. The common service is orthopedic
surgery, not general surgery or cardiology, because PG A does not have
cardiologists and PG B does not have general surgeons.
2. Identify the PSAs by zip code for orthopedic surgery for each
Physician Group. In this example, there will be two PSAs: One for PG
A's orthopedic surgery practice (``PSA A'') and one for PG B's
orthopedic surgery practice (``PSA B'').
3. Determine the ACO's share in each of the relevant PSAs. In this
example, both PG A's and PG B's orthopedic surgeons serve patients
located in both PSAs. Thus, shares need to be calculated in PSA A and
PSA B. The ACO's share of orthopedic surgery in PSA A would be the
total Medicare allowed charges for claims billed by the ACO's
orthopedic surgeons (which are PG A's and PG B's total allowed charges
for claims billed by orthopedic surgeons for Medicare beneficiaries in
PSA A's zip codes) divided by the total allowed charges for orthopedic
surgery for all Medicare beneficiaries in PSA A. Likewise, the ACO's
share of orthopedic surgery services in PSA B would be the total
Medicare allowed charges for claims billed by the ACO's orthopedic
surgeons (which are PG A's and PG B's total allowed charges for claims
billed by orthopedic surgeons for Medicare beneficiaries in PSA B's zip
codes) divided by the total allowed charges for orthopedic surgery for
all Medicare beneficiaries in PSA B.
For the inpatient services:
1. Identify the hospitals' common MDCs. In this example, Hospital 1
and Hospital 2 each provide services in 10 MDCs, but only two are
common services: Cardiac care (i.e., services related to diseases and
disorders of the circulatory system--MDC 05) and orthopedic care (i.e.,
services related to diseases and disorders of the musculoskeletal
system and connective tissue--MDC 08).
2. Identify the PSAs by zip codes for cardiac care and orthopedic
care for each hospital. In this example, there will be four PSAs:
Hospital 1 PSA for cardiac care, Hospital 1 PSA for orthopedic care,
Hospital 2 PSA for cardiac care, and Hospital 2 PSA for orthopedic
care.
[[Page 21900]]
3. Determine the ACO's share in each of the relevant PSAs. In this
example, Hospital l and Hospital 2 both serve cardiac patients located
in each hospital's PSA for cardiac care, and both serve orthopedic
patients in each hospital's PSA for orthopedic care. Thus, shares need
to be calculated in all four PSAs. The ACO's share of cardiac care in
Hospital 1's PSA would be the ACO's total number of inpatient
discharges for MDC 05 (which are Hospital 1's and Hospital 2's total
inpatient discharges for cardiac care in Hospital l's PSA) divided by
the total number of inpatient discharges for MDC 05 for all residents
of this PSA. Use the same process for the other three PSAs.
For the outpatient services:
1. Identify the hospitals' and ASC's common outpatient categories.
In this example, Hospital 1 does not provide outpatient services, while
Hospital 2 and the ASC each provide services in 10 outpatient
categories, but only two are common services: cardiovascular tests/
procedures (outpatient category 2) and musculoskeletal procedures
(outpatient category 5).
2. Identify the PSAs by zip codes for cardiovascular tests/
procedures and musculoskeletal procedures for each facility. In this
example, there will be four PSAs: Hospital 2 PSA for cardiovascular
tests/procedures, Hospital 2 PSA for musculoskeletal procedures, ASC
PSA for cardiovascular tests/procedures, and ASC PSA for
musculoskeletal procedures.
3. Determine the ACO's share in each of the relevant PSAs. In this
example, Hospital 2 and ASC both provide cardiovascular tests/
procedures to patients located in each facility's PSA for
cardiovascular tests/procedures, and both provide musculoskeletal
procedures to patients located in each facility's PSA for
musculoskeletal procedures. Thus, shares need to be calculated in all
four PSAs. The ACO's share of cardiovascular tests/procedures in
Hospital 2's PSA would be the ACO's total Medicare fee-for-service
payments for outpatient category 2 (which are Hospital 2's and the
ASC's total payments for outpatient cardiovascular tests/procedures for
Medicare beneficiaries in Hospital 2's PSA) divided by the total
payments for outpatient category 2 for all Medicare beneficiaries in
this PSA. Use the same process for the other three PSAs.
Application to the Safety Zone: In this example, the ACO would
calculate ten PSA shares. If all of the shares are 30 percent or below
and the hospital inpatient and outpatient services are non-exclusive to
the ACO, then the ACO would fall within the safety zone. In other
words, the 30 percent threshold must be met in each relevant PSA for
each common service. If that condition is not met, then the ACO does
not fall within the safety zone.
Application to the Mandatory Review Threshold: If only one of the
ten PSA shares in this example exceeds 50 percent, the ACO would be
required to obtain an antitrust review from one of the Agencies before
participating in the Shared Savings Program. In other words, mandatory
review is necessary even if the share for only one common service
exceeds 50 percent in any PSA in which another ACO participant provides
that service.
V. Request for Comments
The Agencies seek public comment from health care providers,
payers, consumers, antitrust practitioners, and other stakeholders on
the following:
1. Whether and, if so, why the guidance in the proposed Policy
Statement should be changed in any respect;
2. Whether other sources of data exist that ACO applicants could
use to determine relevant PSA shares (as identified in Step 3 of the
Appendix) for:
(a) Physician services rarely used by Medicare beneficiaries (e.g.,
pediatrics, obstetrics, and neonatal care); and
(b) Inpatient hospital services located in states where all-payer
hospital discharge data are not available.
3. Whether providing the documents and information required to
obtain an expedited antitrust review will present an undue burden on
ACO applicants--specifically, the Agencies seek comment on:
(a) The necessity of and practical utility for the proposed
collection of information;
(b) The accuracy of the estimated time and cost to prepare
responses to the requested collection of information;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected; and
(d) Ways to minimize the burden of collecting the information on
those who are to respond.
Interested parties are invited to submit written comments
electronically or in paper form. Comments should state ``Proposed
Statement of Antitrust Enforcement Policy Regarding ACOs Participating
in the Medicare Shared Savings Program, Matter V100017'' both in the
text and on the envelope. Please note that your comment, including your
name and your state, will be placed on the public record of this
proceeding, including on the publicly accessible FTC Web site, at
http://www.ftc.gov/os/comments/aco-comments/index.shtm.
Because comments will be made public, they should not include any
sensitive personal information, such as an individual's Social Security
number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. Comments also
should not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, comments should not include any ``[t]rade secret or any
commercial or financial information which is obtained from any person
and which is privileged or confidential,'' as provided in Section 6(f)
of the FTC Act, 15 U.S.C. 46(f), and Commission Rule 4.10(a)(2), 16 CFR
4.10(a)(2). Comments containing material for which confidential
treatment is requested must be filed in paper form and clearly labeled
``Confidential.''
Because mail delivered to the FTC by the U.S. Postal Service is
subject to delay due to heightened security screening, please consider
submitting your comments electronically. Comments filed electronically
should be submitted by using the following Web link: https://ftcpublic.commentworks.com/ftc/acoenforcementpolicy (and following the
instructions on the web-based form). To ensure that the Agencies
consider an electronic comment, you must file it on the web-based form
at the Web link https://ftcpublic.commentworks.com/ftc/acoenforcementpolicy. If this Notice appears at http://www.regulations.gov/#!home, you may also file an electronic comment
through that Web site. The Agencies will consider all comments that
regulations.gov forwards to the Commission. You may also visit the FTC
Web site at http://www.ftc.gov/opp/aco/ to read the Notice and the news
release describing it.
A comment filed in paper form should reference the ``Proposed
Statement of Antitrust Enforcement Policy Regarding ACOs Participating
in the Medicare Shared Savings Program, Matter V100017'' both in the
text and on the envelope, and should be mailed or delivered to the
following address: Federal Trade Commission, Office of the Secretary,
Room H-113 (Annex W), 600 Pennsylvania Avenue, NW., Washington, DC
20580. The FTC requests that any comment filed in paper form be sent by
courier or overnight service, if possible, because U.S. postal mail in
the Washington area and at the Commission is subject to
[[Page 21901]]
delay due to heightened security precautions.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. The Agencies will consider all timely and responsive
public comments, whether filed in paper or electronic form. Comments
received will be available to the public on the FTC Web site, to the
extent practicable, at http://www.ftc.gov/os/comments/aco-comments/index.shtm. As a matter of discretion, the Commission makes every
effort to remove home contact information for individuals from the
public comments it receives before placing those comments on the FTC
Web site. More information, including routine uses permitted by the
Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.shtm.
Paperwork Reduction Act
The Medicare Shared Savings Program is exempt from the Paperwork
Reduction Act.\43\ Nonetheless, the Agencies are seeking comments
relevant to the utility and burden of the submission of documents and
information (collectively, ``information'') required in connection with
requests for expedited antitrust review as described above.\44\ The
Agencies are providing this opportunity for public comment regarding
the utility of the information to be provided in support of an ACO
request for antitrust review and steps to minimize the burden of
collecting and submitting that information. Specific questions
regarding these considerations are included in the Request for Comment
part of the Supplementary Information section above.
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\43\ The Patient Protection and Affordable Care Act provides:
``Chapter 35 of title 44, United States Code [44 U.S.C. 3501 et
seq., the Paperwork Reduction Act] shall not apply to the [Medicare
Shared Savings] program.'' Patient Protection and Affordable Care
Act, Public Law 111-48, section 3022 (2010) (codified at 42 U.S.C.
1395jjj(e)).
\44\ Cf. Paperwork Reduction Act, 44 U.S.C. 3501-3521.
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Subject to further refinement by public comment, calculating the
projected overall burden of collecting and submitting the required
information necessarily entails estimating the number of ACOs that will
apply for expedited review, and the average time necessary per
applicant to respond. To help inform some of these estimates, the FTC
has drawn upon CMS's notice of proposed rulemaking regarding the
Medicare Shared Savings Program, published simultaneously with this
Federal Register notice.\45\
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\45\ CMS NPRM on ACOs.
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CMS has estimated that some 1.5 to 4 million Medicare beneficiaries
will be aligned with a participating ACO during the first three years
of the Shared Savings Program.\46\ Moreover, the amendments to the
Social Security Act that gave rise to the Program specify that, at a
minimum, the ACO shall have at least 5,000 such beneficiaries assigned
to it in order to be eligible to participate in the Shared Savings
Program.\47\ Thus, by extrapolation, there may be a range of 300 to 800
ACOs.
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\46\ Id., preamble to proposed rule.
\47\ Section 3022 of the Affordable Care Act amended Title XVIII
of the Social Security Act (42 U.S.C. 1395 et seq.) by adding new
section 1899 to establish ``a shared savings program * * * that
promotes accountability for a patient population and coordinates
items and services under [Medicare] Parts A and B, and encourages
investment in infrastructure and redesigned care processes for high
quality and efficient service delivery.'' Patient Protection and
Affordable Care Act, Public Law 111-48, section 3022 (2010)
(codified at 42 U.S.C. 1395jjj(a)(1). Section 1899(b)(2)(D)
(codified at 42 U.S.C. 1395jjj(b)(2)(D)) specifies the minimum
number of beneficiaries per eligible program participant.
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Not all of these ACO applicants will be covered by the Policy
Statement, however, because the Statement applies only to
collaborations among otherwise independent providers and provider
groups \48\ formed after March 23, 2010, the date of passage of the
Patient Protection and Affordable Care Act; it does not apply to such
collaborations formed earlier or to ACOs created through merger.\49\
Our general understanding is that a number of long-existing
institutions will apply to become ACOs, but also that a number of ACO
applicants are likely to be newly formed. Accordingly, we estimate that
roughly one-half of ACO applicants will be covered, yielding a range of
150 to 400 ACOs likely to be covered by the Policy Statement.
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\48\ A ``collaboration'' comprises a set of agreements, other
than merger agreements, among otherwise independent entities jointly
to engage in economic activity, and the resulting economic activity.
U.S. Dep't of Justice & Fed. Trade Comm'n, Antitrust Guidelines for
Collaborations Among Competitors Sec. 1.1 (2000), available at
http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf.
\49\ Merger transactions, including transactions that meet the
criteria set forth in Section 1.3 of the Competitor Collaboration
Guidelines, will be evaluated under the Agencies' Horizontal Merger
Guidelines. See U.S. Dep't of Justice & Fed. Trade Comm'n, Antitrust
Guidelines for Collaborations Among Competitors Sec. 1.3 (2000),
available at http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf;
U.S. Dep't of Justice & Fed. Trade Comm'n, Horizontal Merger
Guidelines (rev. ed. 2010), available at http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf.
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Not all ACO applicants covered by the Policy Statement will need to
seek expedited antitrust review, however; only ACO applicants not
qualifying for the rural exception and having a share over 50 percent
for any common service provided to patients by two or more independent
ACO participants in the same PSA must do so. Other ACO applicants that
are not required to obtain an antitrust review and do not fall within
the Policy Statement's Safety Zone nonetheless may obtain a review if
they wish additional antitrust certainty. For the purposes of this
burden analysis, we estimate that the number of submissions for
expedited antitrust review, both required and voluntary, will range
from roughly one-quarter to one-half of all ACO applications covered by
the Policy Statement. This yields an estimated range of 38 to 200 ACO
applicants that will seek antitrust review. Erring conservatively, the
following burden estimate will use the upper bound estimate, i.e., 200
submissions.
In developing an estimate of the time necessary for applying ACOs
to collect and review and submit the information for antitrust review,
we note that the Policy Statement asks for the application the ACO has
submitted or plans to submit to CMS, information that will already have
been gathered and organized. Other required information is similar in
nature to that required when submitting a pre-merger notification
filing under the Hart-Scott-Rodino Act (``HSR''); \50\ the basic burden
estimate for HSR premerger notification filings, OMB Control No. 3084-
0005, is 39 hours. Accordingly, we estimate that, in the aggregate,
ACOs and their antitrust counsel likely will devote approximately 30 to
50 hours to retrieving, reviewing, and submitting the information. This
estimate is conservative, since submitters may submit information about
the relevant markets in a format of their choosing. There is no
prescribed notification and report form as there is for a submission
under the HSR Rules.\51\
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\50\ See Section 7A of the Clayton Act, 15 U.S.C. 18a, as
amended by the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
Public Law 94-435, 90 Stat. 1390.
\51\ See 16 CFR 801-803 (2010).
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Estimated Labor Costs
It is not possible to calculate with precision the labor costs
associated with providing the required information, because responses
will entail participation by management and support staff at various
compensation levels within many different entities. Individuals within
some or all of those labor categories may be involved in the
information-collection process. Nonetheless, the FTC has assumed that
executive-level personnel and outside legal counsel will handle most of
the
[[Page 21902]]
tasks involved in gathering and producing the responsive information,
and has applied an average hourly wage of $460/hour for their labor.
Thus, the labor costs per applicant for expedited review should range
from approximately $13,800 to $23,000.
Estimated Annual Capital or Other Non-Labor Costs
The capital or other non-labor costs associated with the
information requests will be minimal. Industry members should already
have in place the means to store information of the volume requested.
In addition, respondents may have to purchase office supplies such as
file folders, computer CDs or DVDs, photocopier toner, or paper in
order to comply with the Commission's requests. The FTC estimates that
such costs will be minimal.
For the Antitrust Division of the Department of Justice.
Sharis A. Pozen,
Chief of Staff and Deputy Assistant Attorney General.
For the Federal Trade Commission.
By direction of the Commission, Commissioner Rosch dissenting.
Donald S. Clark,
Secretary.
[FR Doc. 2011-9466 Filed 4-18-11; 8:45 am]
BILLING CODE 6750-01-P