Accountable Care Organizations, Unaccountable To Antitrust Law?

The Affordable Care Act provides for the creation of Accountable Care Organizations (“ACOs”), organizations of healthcare providers that agree to be held accountable for the cost and quality of care provided to Medicare beneficiaries.  Beginning in January 2012, Medicare will reward ACOs for meeting certain benchmarks set by the Secretary of Health and Human Services.  As a result, many healthcare providers that historically have been competitors are now seeking to join forces as ACOs.

Although the Affordable Care Act promotes the establishment of ACOs, Congress did not carve out an antitrust exemption for them.  Thus, there is a concern in Washington that ACOs, if not properly regulated, could become monopolies that run afoul of the antitrust laws.  J. Thomas Rosch, a member of the Federal Trade Commission, recently expressed such sentiments in letters written to the White House and the federal Medicare agency, according to The New York Times.  Commissioner Rosch notes the concern that ACOs, through their substantial bargaining power, could drive up the price of privately insured healthcare to offset the loss in Medicare revenue.

Commissioner Rosch’s letters also reveal a struggle between the FTC and the Department of Justice over who should regulate ACOs.  The DOJ is generally viewed by healthcare providers as the entity that is more understanding of their efforts to join forces and collectively negotiate with health insurance plans.  Not surprisingly, healthcare providers believe that the DOJ should regulated ACOs and have accused Mr. Rosch and the FTC of attempting to encroach on the DOJ’s territory.

The antitrust concerns inherent in the conduct of ACOs, and the uncertainty over who will regulate the ACOs’ compliance with the antitrust laws, could lead to a delay in the formation of ACOs.  Hopefully these issues will be resolved sooner rather than later, and ACOs will be allowed to operate within a regulatory framework, consistent with the antitrust laws, to allow them to deliver the cost savings and quality improvements as intended.