Antitrust “safety zone” withdrawal: ACO compliance considerations

The US Department of Justice's (DOJ) recent withdrawal from a 2011 policy that created an antitrust safety zone for Accountable Care Organizations (ACOs) may alter the considerations and comfort of healthcare entities that have relied on longstanding antitrust enforcement policies to create and operate healthcare organizations seeking to participate in shared savings models.

The withdrawal of the safety zone reduces the "antitrust clarity" previously afforded to ACOs in the Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (2011 Statement). This guidance followed the Affordable Care Act's (ACA) focus on the triple aim in healthcare—improving quality of care, saving cost and focusing on overall population health—and was intended to encourage entities to move forward with the newest in healthcare initiatives. DOJ's withdrawal from the policy injects new uncertainty for healthcare industry participants that sought to advance these initiatives.

Previously, the DOJ and FTC had acknowledged that the ACA "encourages physicians, hospitals, and other providers to integrate their healthcare delivery systems in order to improve the quality and reduce the costs of healthcare services." The 2011 Statement set "forth a safety zone for certain ACOs that are highly unlikely to raise significant competitive concerns and, therefore, will not be challenged by the agencies under the antitrust laws, absent extraordinary circumstances." Additionally, the 2011 Statement acknowledged that an ACO falling outside the safety zone could be procompetitive and noted that "an ACO that does not impede the functioning of a competitive market will not raise competitive concerns." The withdrawal of the 2011 Statement does not change such an analysis, but in the absence of the safety zone, ACOs should carefully consider the procompetitive rationale and efficiencies impacting patient care.

In withdrawing the safety zone policy, DOJ flagged its concerns with exchanges of competitively-sensitive information that could facilitate collusion between competitors, including "full-blown criminal conspiracies" to fix prices or wages. Officials noted the increasing importance of data in healthcare and use of advanced tools like artificial intelligence and machine learning as transformative in the industry and claimed that maintaining the safety zones would be like designing policies for cassette tapes in an era of digital streaming. Healthcare entities should revisit any information exchanges—such as wage and compensation or pricing information—in light of DOJ's withdrawal from the 2011 and earlier Statements, carefully assess the procompetitive basis for any information exchange and ensure documentation protocols moving forward to mitigate post-safety zone risks.

The ACA ushered in a new era in the shift to value-based reimbursement. The most recognizable program in this effort is the Medicare Shared Savings Program (MSSP) established under Section 3022. CMS recently announced that in 2023 there will be 456 ACOs and 10.9 million assigned beneficiaries participating in the MSSP. To create an ACO, physicians, hospitals and other healthcare providers are bound by contractual arrangements to become measurably accountable for the total cost and quality of care provided under Medicare to an assigned population of fee-for-service beneficiaries. Just this past November in the 2023 Physician Fee Schedule final rule, CMS stated a dual purpose goal "of sustaining participation by existing ACOs and increasing program growth" while also advancing equity within the program. Will the DOJ's withdrawal action negatively impact CMS's goal to expand participation in the MSSP?

ACOs have flourished beyond the MSSP program due to generally applicable policies that have encouraged commercial insurers and provider organizations to engage in the investment and coordination required to create the clinical and financial integration necessary to achieve savings, moving away from payment based solely on the volume of services provided. This success has been driven, in part, by the regulatory and enforcement flexibility afforded to ACOs, including the 2011 Statement. It is unclear what kind of chilling effect the DOJ's recent action, in conjunction with its Memorandum of Understanding with HHS's Office of the Inspector General in November 2022, may have on the formation of new ACOs.

Healthcare providers and suppliers forming or joining ACOs should ensure that they are examining antitrust principles, setting and following guardrails that account for competitive considerations and revisiting and evaluating their policies and related antitrust risk. Existing ACO entities should examine their antitrust compliance to consider whether changes could lead to additional protection in the case of heightened antitrust scrutiny. Absent of case law or enforcement actions, the 2011 Statement remains a starting point for evaluating ACO compliance with antitrust principles.

Norton Rose Fulbright healthcare and antitrust attorneys continue to monitor these developments and are advising clients on the operational implications of this change in policy.