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Antitrust: DOJ Scuttles ACO Guidance, Unsettles Ground Under Provider Joint Contracting Models

On Friday, February 6, 2023, the Department of Justice (DOJ) announced the withdrawal of the 2011 Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (2011 ACO Statement) in addition to two other health care antitrust policy statements. The 2011 ACO Statement was jointly issued by the DOJ and the Federal Trade Commission (FTC). The DOJ has characterized the withdrawn statements as “outdated” and as no longer “fully reflect[ing] market realities.” Withdrawal by the DOJ is consistent with the Biden administration’s pronouncements that it will be taking a more aggressive antitrust enforcement approach, which includes a focus health care. The FTC, however, has not yet withdrawn the statements. 

For context, the antitrust laws generally preclude providers and provider organizations from engaging in joint negotiations with payers. However, long-standing DOJ-FTC antitrust policy statements provide guidance on how clinically or financially integrated provider networks that meet certain criteria may engage in certain joint activities and avoid per se condemnation under Section 1 of the Sherman Act, which prohibits contracts, combinations, and conspiracies "in restraint of trade or commerce.” Clinical integration among providers in many ways can be difficult to establish and, equally, to demonstrate. In contrast, financial integration among providers has become in many ways more feasible than when the 2011 ACO Statement was adopted for a variety of reasons, including payer product offerings, a move away from fee-for-service payments, growth capital partners, and regional factors. 

The withdrawn 2011 ACO Statement, among other things, specified that the DOJ and FTC will not automatically treat as presumptively unlawful joint negotiations with payers by accountable care organizations (ACOs) if the negotiations are reasonably necessary to an ACO’s primary purpose of improving health care delivery and the ACO meets the Centers of Medicare and Medicaid Services’ (CMS) eligibility criteria and “uses the same governance and leadership structures and clinical and administrative processes it uses in the Shared Savings Program to serve patients in commercial markets.”

  • The 2011 ACO Statement applied to collaborations among independent providers and groups that were eligible and intended to, or had been approved, to participate in the Medicare Shared Savings Program (MSSP). 

  • The 2011 ACO Statement maintained that antitrust agency scrutiny would not follow certain “ACOs that meet the CMS eligibility criteria for and intend, or have been approved, to participate in the Shared Savings Program and are highly unlikely to raise significant competitive concerns.” To qualify as highly unlikely to raise competitive concerns and avoid antitrust scrutiny, the DOJ and FTC announced a safety zone in which the combined share of services in a professional services agreement (PSA) for the ACOs must be 30 percent or less of each common service in a PSA. Hospitals and ambulatory surgery centers must be non-exclusive to the ACO to fall within the safety zone, regardless of PSA share.

  • Even for the ACOs that do not fall within the safety zone, the 2011 ACO Statement established that joint negotiations with private payers would not be per se violations of the Sherman Act and instead evaluated under a “rule of reason” analysis if they satisfied CMS eligibility criteria and the agreement is reasonably necessary to accomplish the procompetitive benefits of the integration.

Recognizing that value, many provider networks and other provider collaborations have relied on participation in the MSSP as an ACO as a stepping stone to demonstrate clinical integration. Since 2011, financial integration has been increasingly accessible to a variety of provider types. Financial integration often centers on down-side risk arrangements. In contrast, clinical integration focuses on structuring the entity as an integrated medical practice and highlighting how participating or member providers operate with a high degree of interdependence and cooperation to deliver cost control and ensure quality.

The DOJ’s withdrawal of the 2011 ACO Statement signals potential increased antitrust scrutiny of ACOs and other provider networks and risk bearing organizations. Continuing to rely on the withdrawn guidance by the DOJ that the FTC has yet to withdraw presents some risk. In the absence of the 2011 ACO Statement, it’s important for those entities to work with their counsel to evaluate clinical and financial integration practices and where they may fall on the continuum of antitrust risk while we wait to learn more from DOJ and, potentially, the FTC. 


© 2023 Foley & Lardner LLPNational Law Review, Volume XIII, Number 79

About this Author

Kinal M. Patel health care attorney Foley & Lardner LLP Houston, TX
Senior Counsel

Kinal Mahesh Patel is a senior counsel health care attorney with Foley & Lardner LLP based in the firm’s Houston office. As a member of the firm’s Health Care Practice Group, Kinal advises health care, life sciences and insurance companies of all sizes as they navigate regulatory reforms and industry trends. Kinal’s practice combines both regulatory and transactional activities.

Transactional Counsel

Kinal provides transactional counsel to health care providers, plans, and other companies on mergers and acquisitions, joint ventures and strategic...

Alexis Bortniker, Health Care Attorney, Foley Lardner Law Firm

Alexis Bortniker is a Partner and health care lawyer with Foley & Lardner LLP. Her practice focuses on transactional and regulatory matters with an emphasis on counseling health systems, hospitals, and other providers in managed care and physician contracting. Ms. Bortniker is a member of the firm’s Health Care Industry Team.

Previously, Ms. Bortniker was an associate with Choate Hall & Stewart LLP where she gained experience working directly with health care organizations on regulatory and corporate compliance issues, including the...

Diane Hazel Denver Antitrust Attorney Foley Lardner

Diane Hazel is a partner and litigation attorney with Foley & Lardner LLP. Diane is based in the firm’s Denver office, where she is a member of the firm’s Antitrust Practice Group.

Diane’s practice focuses on government investigations, antitrust counseling and litigation, and other white collar, class action, and commercial litigation matters. She has worked on a wide range of merger matters and antitrust conduct issues, including market allocation, price fixing, group boycotts, reverse payments, product hopping, refusals to deal, bundling,...