FTC: Accountable Care Organizations May Run Afoul of Antitrust Laws

Accountable care organizations encouraged by the federal health reform law potentially could conflict with federal antitrust laws, according to J. Thomas Rosch, a Republican member of the Federal Trade Commission, the New York Times reports.

Rosch, in recent letters to White House and CMS officials, said ACOs -- in which physicians and hospitals form joint ventures in an attempt to find innovate and cost-efficient ways to deliver care -- could reduce competition and raise consumers' costs without "vigorous antitrust enforcement."

According to the Times, economists and other experts have noted that ACOs have the potential to provide significant efficiencies, but health care providers could be enticed to engage in "monopolistic practices," particularly if they operate in small- and medium-sized communities that have just one or two hospitals or health care systems.

In his letters, Rosch -- an antitrust lawyer for more than 35 years -- wrote that the "Supreme Court long ago prohibited competing providers from jointly contracting to provide their services, except in specified circumstances."

Rosch recommended that the federal government set clear goals for Medicare savings and measure ACOs' performance with respect to both Medicare and the private insurance market. He added, "Otherwise, there will be a real risk that the savings accruing to Medicare will just come at the expense of private insurers."

Letters Reveal 'Struggle' Between FTC, DOJ; Could Slow Development of ACOs

According to the Times, Rosch's letters highlight an apparent "struggle" between FTC and the U.S. Department of Justice over which agency will monitor the market.

Although Rosch noted that the views expressed in the letters were his own, they appear to mirror FTC's views on antitrust laws in the health care industry, as evidenced by previous advisories that the agency has released over the past 15 years, the Times reports. As a result, the uncertainty about enforcement authority could inhibit the formation of ACOs, according to the Times.

Officials at FTC and DOJ, which have historically shared the responsibility of enforcing antitrust laws, are in the process of drafting a joint statement explaining how they intend to evaluate the operations of ACOs, the Times reports.

Further, CMS Administrator Donald Berwick has said that he plans to issue new regulations for ACOs (Pear, New York Times, 2/8).