FTC/DOJ Joint Policy Statement on ACO Antitrust Enforcement

May 19, 2011, 11:18 AM

In order for Accountable Care Organizations (ACOs) to function properly, ACOs will undoubtedly need to engage in certain activity that the federal government would otherwise deem to raise some antitrust concerns. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) are the agencies charged with enforcing the federal antitrust laws in this country and in anticipation of the release of the ACO Proposed Rule, the FTC and DOJ worked together to develop a plan with respect to antitrust enforcement in the ACO context. The result was a jointly issued statement released on March 31, 2011 regarding the agencies collective position on antitrust enforcement in the ACO context. For those interested in viewing the joint statement, click here. The agencies are seeking public comment with respect to the joint statement and such comments are due on or before May 31, 2011.

In the joint policy statement, the agencies propose that ACOs would enjoy the protection of a safety zone as long as the relevant market share held by the ACO in the applicable service area was less than 30%. If, however, the market share in the applicable service area exceeds 50%, then the agencies have proposed in their joint statement a mandatory agency review process. For those ACOs that fall between 30% market share and 50% market share in the relevant service area, the agencies have proposed in the joint statement that they will look at the particular facts and circumstances of the arrangement and have provided in the joint statement guidance on conduct that, if avoided by the ACO, would significantly reduce the likelihood that the agencies would launch an antitrust investigation. In addition, the joint statement provides for an expedited review process by the agencies for matters pertaining to ACO antitrust issues.

Certainly, entities contemplating the formation of an ACO or looking into joining an ACO formed by other ACO participants will need to be keenly aware of the market share that the potential ACO group would comprise within the relevant market prior to agreeing to enter into the potential ACO. ACOs may want to structure to have less than the 30% market share threshold, to enjoy the safety zone and minimize involvement of the agencies in reviewing the ACOs activities. That said, the agencies in the joint statement, provide helpful commentary and guidance on measures that an ACO in the 30% to 50% market share range can take in an attempt to limit the ACOs exposure to potential antitrust investigations by the agencies. ACOs and their administrators and governing bodies need to understand and be aware of the potential pitfalls with respect to violations of the federal antitrust laws and structure their ACOs accordingly. --Aaron J. Ambrose