AHLA. A. All Together Now: Minimizing Antitrust Risk when Creating and Operating ACOs, PHOs, and Other Clinically Integrated Entities

Transcription

1 AHLA A. All Together Now: Minimizing Antitrust Risk when Creating and Operating ACOs, PHOs, and Other Clinically Integrated Entities Alpa G. Davis Attorney Federal Trade Commission Washington, DC Ashley McKinney Fischer McDermott Will & Emery LLP Chicago, IL Physicians and Hospitals Law Institute February 5-7, 2014

2 AHLA Physicians and Hospitals Law Institute February 5 7, 2014 All Together Now: Minimizing Antitrust Risk When Creating and Operating ACOs, PHOs and Other Clinically Integrated Entities Alpa G. Davis, Attorney, Federal Trade Commission* Ashley M. Fischer, Partner, McDermott Will & Emery LLP Any views expressed herein are solely those of the presenter and not the Federal Trade Commission or any of the Commissioners 1 Today s Agenda Overview of applicable Antitrust Law & Agency Guidance Antitrust compliance checklist Hypotheticals 2 1

3 Purpose of Antitrust Law Prevent private business practices that unreasonably restrain competition Competition promotes: Lower prices Better quality of goods/services Increased choice, selection, convenience, and innovation Protect competition for consumers, not competitors 3 Provider Networks A joint venture among providers (physicians only or physicians and hospital(s)) designed to contract with managed care payors Can produce significant efficiencies and procompetitive benefits If structured or operated improperly, however, can expose the parties to antitrust liability under Section 1 of the Sherman Act, 15 U.S.C

4 Sherman Act Section 1 Prohibits agreements that unreasonably restrain competition Per se illegality Price fixing by competitors Market allocation by competitors Group boycotts by competitors Rule of reason Pro competitive benefits v. anti competitive effects 5 Sherman Act Section 1 Section 1 applies to: Independent, competing providers Section 1 does not apply to: Physicians all within the same group practice A hospital and its full time, employed physicians A hospital and its controlled subsidiaries 6 3

5 Key Antitrust Implication General rule: Independent, competing providers may not agree on the prices they will charge for their services (per se illegal) Qualification: Independent, competing providers who participate in a clinically or financially integrated venture may be able to jointly negotiate managed care rates that are ancillary to their joint venture (rule of reason analysis) 7 Joint Venture Analysis For a partially integrated joint venture, under the rule of reason approach, courts will examine: Nature of the integration among the joint venture participants and its potential to generate pro competitive efficiencies The product and geographic markets in which the joint venture participants compete and the joint venture s effects on competition in the market Any restraints imposed by the joint venture, such as an agreement on price, to determine if it is an ancillary restraint 8 4

6 Arizona v. Maricopa, 457 U.S. 332 (1982) Supreme Court held agreement among competing physicians concerning a maximum fee schedule constituted per se illegal price fixing and did not result in competitive efficiencies Distinguished the agreement from other joint ventures where competitors were legitimately integrated To avoid condemnation as illegal price fixing, the agreement must be analogous to partnerships or other joint arrangements in which persons who would otherwise be competitors pool their capital and share risks of loss as well as the opportunities for profit (p. 356) Meaningful integration may move otherwise per se illegal conduct into rule of reason territory 9 Financial Integration In Maricopa, the Supreme Court was referring to financial integration Mechanisms for financial integration: Capitation Predetermined percentage of premium or revenue from the plan Significant financial incentives to collectively achieve specified costcontainment goals. Two methods: Substantial withhold and distribution based on group performance in meeting the cost containment goals of the network as a whole; or Cost or utilization targets and substantial financial rewards or penalties based on group performance in meeting the targets. Provision of a complex or extended course of treatment that requires the substantial coordination of care by different specialties for a fixed, predetermined payment (costs vary) Financial integration can lead to reduced costs, improved efficiency, and improved quality of care 10 5

7 Clinical Integration An active and ongoing program to evaluate and modify the practice patterns of providers and create a high degree of interdependence and cooperation to control costs and ensure quality 11 Clinical Integration No set rules, but some components could include: Mechanisms to monitor and control utilization and costs and to assure quality Selection of providers committed to the program Investment in the infrastructure of the program (monetary and human) Use of common information technology Development and adoption of clinical protocols Performance review of participants based on implementation of protocols Mechanisms to ensure adherence to protocols 12 6

8 Sources of Agency Guidance Statements of Antitrust Enforcement Policy in Health Care (1996) Antitrust Guidelines for Collaborations Among Competitors (2000) Improving Health Care: A Dose of Competition (2004) Clinical Integration Workshop (2008) ACO Policy Statement (2011) 13 FTC Advisory Opinions & Enforcement Actions Advisory Opinions MedSouth (2002 and 2007) Suburban Health Organization (2006) Greater Rochester IPA (2007) TriState Health Partners (2009) Norman PHO (2013) FTC Enforcement Actions Brown & Toland (2003, 2004, 2005) Advocate Health Partners (2006) 14 7

9 Accountable Care Organizations ( ACOs ) ACOs are a type of provider network joint venture that agrees to be responsible for the cost, quality, and care of a patient population ACOs aim to provide seamless patient care between providers and reward quality and value of care ACOs may contract with: Medicare, commercial payers or both The entity with whom the ACO contracts informs the antitrust analysis 15 If an ACO: ACOs Meets the CMS eligibility criteria and participates in the Medicare ACO program; and Uses the same governance structure and same clinical and administrative processes in both Medicare and commercial markets Then the Agencies will afford rule of reason treatment to the ACO s operations in the commercial market 16 8

10 Antitrust Compliance Checklist 1. Form the CIN for lawful purposes To implement clinical initiatives designed to reduce unnecessary costs to the healthcare system To implementing clinical initiatives designed to improve the quality of care provided to patients To organize network providers to pursue incentive programs offered by payors in the market through clinical initiatives designed to modify clinical practices 17 Antitrust Compliance Checklist And not for unlawful purposes Creating a network solely to jointly contract with payors, without any intention to seek modify clinical behavior Creating a network to increase bargaining leverage with payors Creating a must have network Creating a network to limit options for payors 18 9

11 Antitrust Compliance Checklist 2. Establish basis for CIN to be viewed under the rule of reason Medicare Shared Savings Program (MSSP) participation Traditional clinical integration analysis 19 Antitrust Compliance Checklist Traditional clinical integration analysis: Articulate program goals Identify clinical initiatives designed to seek to achieve program goals Establish interdependence of participating providers Educate participating providers about clinical initiatives Implement data sharing mechanisms Set metrics to measure network performance against program goals Monitor and analyze network performance Communicate performance to network providers Investment of time and resources 20 10

12 Antitrust Compliance Checklist 3. Avoid Overinclusion The success problem Enough providers to establish interdependence without creating market or monopoly power through including too many providers Market power is the ability to raise prices above competitive levels for a significant period of time Monopoly power is the ability to control prices or exclude competition May be shown by unrestrained price increases due to a lack of competition May be inferred from a high market share or excessive profits 21 Antitrust Compliance Checklist Antitrust safety zones Physician network joint ventures sharing substantial financial risk <30% physicians for a non exclusive network <20% physicians for an exclusive network By physician specialty Headcount In the relevant geographic market 22 11

13 Antitrust Compliance Checklist Antitrust safety zones (cont.) MSSP participating ACOs <30% independent ACO participants providing common services Hospitals and ASCs must be non exclusive By physician specialty for physicians, major diagnostic category ( MDC ) for inpatient facilities and CMSdefined outpatient category for outpatient facilities Medicare revenue In each ACO participant s primary service area (top 75% patient draw zip codes) 23 Antitrust Compliance Checklist 4. Avoid Payor Contracting Practices Disfavored by Agencies Exclusive networks Tying provisions Anti steering clauses 24 12

14 Antitrust Compliance Checklist 5. Prevent Spillover Collusion Adopt Antitrust Compliance Policy to educate participating providers on parameters of permissible and impermissible activity under their collaboration Competing participating providers must continue to compete outside of the scope of the CIN No unlawful boycotts or market allocations Restrict the exchange of competitively sensitive information 25 Hypothetical #1 Large, urban, tertiary academic medical center (AMC) forms a CIN with a 75 bed suburban, community hospital located in the AMC s secondary service area The community hospital routinely refers patients to the AMC for tertiary and some secondary services that the community hospital does not provide 26 13

15 Hypothetical #1 For both physician and hospital services, the hospitals identify and implement clinical practice protocols pertaining to the most common diagnoses of the patients that the community hospital refers to the AMC The hospitals agree to share clinical data pertaining to the patients that the community hospital refers to the AMC The hospitals seek to jointly contract with payors for their hospital services and for physician services on the basis of clinical integration 27 Hypothetical #2 Several health systems in a state form a collaboration to pursue the development and implementation of clinical best practices The health systems primary and secondary service areas do not overlap but are contiguous Health System Health System Best Practices Health System Health System 28 14

16 Hypothetical #2 The health systems have no common patients and will not exchange clinical data The health systems desire to pool their expertise regarding best practices, clinical protocols and care management programs, and are willing to agree to adopt and implement the same best practices, clinical protocols and care management programs The health systems desire to jointly contract with payors on the basis of clinical integration 29 Hypothetical #3 Hospital is the only hospital in the county Hospital forms a CIN Almost all of the physicians on the hospital s medical staff want to participate in the CIN Providers would be viewed to be sufficiently integrated and joint contracting would be viewed as ancillary to the CIN s purposes Hospital desires to jointly contract on behalf of all CIN participants 30 15

17 Hypothetical #4 Hospital desires to form a cardiovascular (CV) services CIN between its employed primary care physicians and independent cardiologists and cardiovascular surgeons No other physician specialties would be included in the CIN Hospital desires to collectively negotiate with payors for all participants in its CIN solely with respect to the incentive or value based component of CV services 31 16