Question

Healthcare System Transformation:

Write a critical analysis addressing the current state of affairs of accountable care organizations, including any antitrust issues that may have arisen.

The critical analysis should include (1) a thorough identification of the ACO/antitrust issue; (2) a background paragraph explaining why this is an issue of health administration importance; (3) a brief landscape section summarizing what scholars/policy-makers/others have written about this issue thus far; (4) your (the student's) personal opinion (written in third person) about the issue and how you believe the issue should be addressed/handled with respect to the law; and (5) a conclusion as to your opinion of where Accountable Care Organizations are headed. The paper should be analytical (not merely an issue summary), succinct, and no more than three pages in length, double spaced, single sided, well referenced, with 1-inch margins and 12-point Times New Roman font. References are not included in the three-page limit.

Answer 1

Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to the Medicare patients they serve.

1) Some health care providers are likely to create and participate in ACO's that serve both Medicare beneficiaries and commercially insured patients. ACOs may generate opportunities for health care providers to innovate in both the Medicare and commercial markets . Therefore, to maximize and foster opportunities for ACO innovation and better health for patients, the Agencies recognize that not all such ACOs are likely to benefit consumers, and under certain conditions ACOs could reduce competition and harm consumers through higher prices or lower quality of care. Thus, the antitrust analysis of ACO applicants to the Shared Savings Program seeks to protect both Medicare beneficiaries and commercially insured patients from potential anti competitive harm while allowing ACOs the opportunity to achieve significant efficiencies.

2) The antitrust laws treat naked price-fixing and market-allocation agreements among competitors per se illegal. Joint price agreements among competing health care providers are evaluated under the rule of reason, however, if the providers are financially or clinically integrated and the agreement is reasonably necessary to accomplish the pro-competitive benefits of the integration. A rule of reason analysis evaluates whether the collaboration is likely to have anti-competitive effects and, if so, whether the collaboration’s potential pro-competitive efficiencies are likely to outweigh those effects. The greater the likely anti-competitive effects, the greater the likely efficiencies must be for the collaboration to pass muster under the antitrust laws. The Agencies have articulated the standards for both financial and clinical integration in various policy statements, speeches, business reviews, and advisory opinions.

3) The Agencies emphasize that ACOs outside the safety zone may be pro-competitive and legal. An ACO that does not impede the functioning of a competitive market will not raise competitive concerns. The creation of a safety zone reflects the view that ACOs that fall within the safety zone are highly unlikely to raise significant competitive concerns; it does not imply that ACOs outside the safety zone necessarily present competitive concerns.