Clinical integration programs and efforts continue to flourish, directly impacting delivery of health care services. The Patient Protection and Affordable Care Act has further spurred the creation of accountable care organizations and generally promoted clinical integration among health care providers as a means to better health care for patients. Today, clinical integration encompasses a broad range of initiatives that are aimed at collaboration among different health care providers and sites to ensure higher quality, better coordinated and more efficient services for patients.
Notwithstanding this federal initiative, uncertainty regarding the application of the antitrust laws in a commercial setting remains one of several obstacles to the growth and development of clinical integration in general, and ACOs in particular. One important way the federal antitrust agencies could help to address this obstacle is to update their guidance regarding clinically integrated joint ventures and otherwise harmonize federal antitrust and health care policy. Doing so should reduce the legal costs and uncertainties that face hospitals, physicians and other providers seeking to engage in clinical integration activities.
The Statements of Antitrust Enforcement Policy in Healthcare issued in August 1996, are the most recent comprehensive guidance from the Federal Trade Commission and the antitrust division of the Department of Justice for the health care field. Statement 8 concerns physician network joint ventures and provides some guidance applicable to clinical integration, but leaves several gray areas with respect to the antitrust agencies' enforcement intentions.
More recently, in October 2011, the FTC and DOJ jointly issued a Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program. The FTC-DOJ statement is a positive step toward reducing burdens on clinically integrated joint ventures. At least for ACOs that participate in Medicare's shared savings program and the pilot program, the ACO policy makes clear that the federal antitrust agencies "will treat joint negotiations with private payers as reasonably necessary to an ACO's primary purpose of improving health care delivery" and will not summarily condemn such ACOs as per se unlawful under the antitrust laws. The ACO policy further sets out an antitrust safety zone for ACOs in the Shared Savings Program whose participants have a combined share of 30 percent or less in each relevant area.
Building on the momentum of ACOs in the health care marketplace and the helpful contributions of the FTC-DOJ statement, the antitrust agencies can add more clarity to the process of clinical integration by issuing further guidance. The FTC has been addressing clinical issues on a case-by-case basis, as evidenced by its most recent staff advisory opinion concerning a proposed multiprovider network in Oklahoma; however, updating the policy statements would provide guidance applicable to the variety of clinical integration formations and would not require extrapolation of principles from staff opinions. In particular, the time is ripe for the FTC and DOJ to take the following actions:
- Harmonize the antitrust safety zones and safe harbors applicable to all ACOs and clinically integrated joint ventures;
- Clarify the circumstances in which a clinically integrated joint venture will be subject to rule-of-reason scrutiny instead of per se treatment;
- Reconsider the methodology used to define markets in which clinically integrated joint ventures compete.
Expand Antitrust Safety Zones
The antitrust agencies should expand the safety zones in the guidance on physician network joint ventures found in the statements,as well as the safety zone in the more recently announced ACO policy, to a uniform 35 percent for all joint ventures that demonstrate verifiable indicia of clinical integration or financial integration, regardless of whether the venture participates in Medicare's Shared Savings Program. The existing safety zones are far too limited to address many clinical integration efforts, and there is no reason for the agencies to have the safety zone for ventures that are clinically integrated to be different from the one for ventures that are financially integrated. The guidance on joint purchasing arrangements among health care providers in the enforcement policy already establishes a 35 percent safety zone for certain joint purchasing arrangements, which is a level that would be appropriate for physician network joint ventures as well.
Clarify Bounds of Strict Per Se Unlawfulness
The agencies also should update the guidance on physician network joint ventures to clarify the circumstances under which they will view a physician network joint venture as per se unlawful under the antitrust laws. The current guidance is more than 15 years old and predates many recent developments in health care, including the Affordable Care Act. In particular, providers interested in establishing a clinical joint venture would appreciate clear guidance on how to avoid being treated as per se unlawful.
Evaluate Methodology for Defining Markets
Market shares are critical for purposes of determining whether a safety zone applies and, for the many physician network joint ventures that will not qualify for a safety zone, for the analysis of the venture's conduct under a rule-of-reason standard. The antitrust agencies' current approach for calculating market shares for physician network joint ventures is set out in the appendix to the ACO policy. It is a complex methodology, especially for ventures that encompass a number of specialty practices, as many clinically integrated ventures do. The agencies should re-examine the methodology to confirm that it remains the best way to determine market shares and simplify it to make is more useful for health care providers.
These efforts, if undertaken, would contribute to the evolution of these innovative, [high]-quality, and patient-oriented clinical integration efforts. Little is more important to curing the fractured health care delivery we suffer in the United States today.
Sharis Arnold Pozen is a partner at Skadden, Arps, Slate, Meagher & Flom LLP. Prior to joining the firm she served as acting assistant attorney general, antitrust division, in the Department of Justice. While at the DOJ, she was actively involved in developing the Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program.