The new Patient Protection and Affordable Care Act that was passed by Congress and President Obama provides for the creation of Accountable Care Organizations, or ACOs. An ACO is a group of medical professionals, including doctors and hospitals, who voluntarily come together to give high quality health care to Medicare patients. The goal of the ACO is to provide high quality patient care at a lower cost.
Experts in the health care industry have raised concerns about the antitrust implications of ACOs; specifically, that ACOs could grow so large in some areas that they will have a monopoly on the health care system.
U.S. antitrust laws limit monopolies and encourage competition. The goal of the antitrust laws is to promote competition because competition benefits consumers with lower prices, higher quality and more choices. The Sherman Act of 1890, the first antitrust statute in the United States, prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.” Basically, if any two companies work together to coordinate pricing or share confidential information, anti-trust concerns develop.
The new health care law has been criticized because some ACOs are able to operate both in the Medicare program and with privately insured patients. In these cases, the ACO could decrease competition and harm patients by providing lower quality health care at a higher price. Some people are concerned that the ACOs could dominate the industry and violate the U.S.’s antitrust laws that encourage a free and open market.
The Department of Justice, or DOJ, and the Federal Trade Commission, or FTC, have recently released new rules that address these antitrust concerns. According to the new rules, the DOJ and FTC will apply a “rule of reason” analysis to ACOs. Basically this means that they will do a cost-benefit analysis by weighing the anti-competitive effects of the ACO with the benefits of the ACO.
Additionally, certain ACOs fall into an antitrust "safety zone" — meaning the agencies will not challenge ACOs that are in the zone. The safety zone is for ACOs that are unlikely to raise significant competitive concerns.
The effect that ACOs will have on the competition in the health care marketplace is still yet to be seen. Indeed, much of “Obama Care” has yet to be written, and critical new regulations are being proposed every day. If you are considering being part of an ACO, contact an experienced attorney to learn more about how governmental agencies will enforce U.S. antitrust laws with respect to ACOs and how to avoid antitrust violations.