Anti-Trust Waiver for ACOs
Physicians have long been terrified of anti-trust laws. Their professional associations, attorneys, consultants, and the media all warn them that any discussion of fees or participation in insurance networks could land them in jail.
For a layperson with no personal stake in the issue, these fears have always seemed excessive, near phobic. But that is easy for me to say — I’m not the one who has to risk jail or prolonged litigation. And the fear is genuine.
Going forward, it looks like doctors and hospitals will have more to fear from anti-trust laws — unless they agree to practice medicine the way the Obama administration thinks it should be practiced.
Writing in The Washington Post, Julie Appleby reports anti-trust enforcement is getting tougher. She writes:
“Amid growing concern about rising health-care costs, the Justice Department is stepping up efforts against hospitals and insurers that it suspects are illegally blocking competitors.”
She adds:
“…a recent settlement the government reached with a Texas hospital system has antitrust experts buzzing” (and) “In the past two years, the department also has settled with a group of Idaho orthopedists over allegations that they conspired to drive up prices and stopped the two biggest Lansing, Mich., insurers from merging, citing ‘a likelihood of unilateral price increases.’”
She concludes with:
“At a conference last May in Arlington, Justice antitrust chief Christine Varney promised an aggressive approach to challenging health-sector mergers and contracts used to keep out new rivals.”
Now all of this is very curious — one might say hypocritical — given the recent prohibition of new physician owned hospitals in the Affordable Care Act and the ongoing use of Certificate of Need restrictions on new hospitals in the states. It would seem that the government that is suddenly concerned about a lack of competition is the very same government that has restricted competition for decades.
But it is even more stunning that the same Justice Department that is pontificating about the lack of competition is also waiving antitrust laws for hospitals and physicians who agree to participate in Accountable Care Organizations. (See the new anti-trust policy statement released jointly by the Federal Trade Commission and Department of Justice)
Why? Because —
“The Federal Trade Commission and the Antitrust Division of the Department of Justice (the “Agencies”) recognize that ACOs may generate opportunities for health care providers to innovate in both the Medicare and commercial markets and achieve for many consumers the benefits Congress intended for Medicare beneficiaries through the Shared Savings Program.”
In other words, the Obama Administration likes ACOs and will waive the laws for them even while it toughens enforcement against other competitors. So, once again the politicians are picking the winners and losers and selectively enforcing the laws to reward their buddies.
I think I have the perfect solution to this dilemma, I’ll call it St. ACO and Fitness Center with Natural Food and Environment. Should pass muster.
This is a good post. The administration is going to use the weapon of anti-trust to try to control the practice of medicine.
The point of an ACO is to bring together all maanner of providers and have them share in the savings. Public health advocates want all the providers working together and talking to each other about a given patient’s respective care. An ACO could facilitate some of these conversations. As an economist, I wonder how bringing together all these entities might also contribute to consolidation in the health care industry and / or facilitate informal collusion.
There’s nothing quite like two federal laws that conflict with one another to provoke an interesting situation.
As relationships between physicians and payers have frayed, a number of legal decisions lessened physicians’ ability to resist health insurers’ efforts to contain costs. The final word belonged to the U.S. Supreme Court in Arizona v. Maricopa County Medical Society (457 U.S. 332). In this 1982 case, the Supremes decided that the physicians involved had united to fix their fees in violation of the Sherman Antitrust Act. At about the same time, the Federal Trade Commission (FTC) ordered the Michigan State Medical Society to “cease and desist” its group boycott of Blue Shield. These and other cases from the second half of the twentieth century resulted in “ample legal authority for prosecuting health care professionals who act collectively to coerce insurer behavior.”
I’m generally against anti-trust law, but there’s certainly very little reason for the federal Sherman Act to apply, because almost all conflict between insurers and physicians occurs within the boundaries of an individual state (http://tinyurl.com/3pn6b77).
As Greg Scandlen points out, carving ACOs out means that providers will have to gain the federal government’s favor to collaborate.
Great point, John.
It’s a great post. In five or ten years, you’ll have government talking about how we have to do something to stop these awful ACO trusts.
Thanks for adding the history, John. You are right that the problem is conflicting public policy — government creating barriers to entry on one hand, and then policing the few remaining competitors on anti-trust grounds on the other.
This is how we build mountain upon mountain of laws and regulations, each new one trying to correct the problems created by the previous ones. We wouldn’t need antitrust laws at all if not for the artificial barriers to competition.
I no longer think it is possible to unravel all of this and recreate a sensible economic system. We are on a long slide into the abyss. Welcome aboard!
, Google dominates the oninle advertising world – which is increasingly the most important space for advertising products and services to a world that is increasingly dominated by wireless access and (for lack of a better turn of phrase) “digital existence.” It’s also clear from Google’s recent products (Chrome), services/products (Book Search), and acquisitions that it intends to be everyone’s one-stop-shop for information on the Internet. What this means, essentially, is that Google, despite its relative youth, may be a company whose dominance may require antitrust law and doctrine to change radically to ensure that access to information is democratic, equitable, and provided in a competitive environment that is reasonably friendly to new entrants. Put another way: Why think that antitrust law has to be a time-bound relic, rather than an ever-changing and dynamic set of principles through which courts can help foster competition?(There are more dots to connect in the argument I just made, but I haven’t the time to connect them.)(2) Does Google have good leadership on the antitrust front?G has certainly made some smart moves. They removed ES from the Apple BOD, and made some important concessions in connection with the Book Search Deal.However, those are simply decisions made ex post on the basis of political and legal considerations that were, at the time, easy to interpret. G, in other words, was forced to take those steps, so patting G on the back for making obviously correct choices would be a bit silly.Here’s the problem with G’s approach to their antitrust woes: The competition team seems to be making some very large blunders in the way it is presenting G’s case. Instead of really trying to work with regulators, they claim:- that G is not that big;- that G’s size or success has nothing to do with a lack of healthy competition in a properly defined market; and- that new incumbents could knock G out at any moment.All of these claims are a bit of a stretch, if not false on their face. This reveals the arrogance of G and the inability of its internal legal team to see how the rest of the world views G (which is quite different from how G views its own role – or should I say mission – in the world). And it does G no good to make these dubious claims publicly, even though lawyers with a certain caste of mind are keen to grandstand in just this way.But what’s more, G’s competition counsel has made a number of ludicrous public statements, drawing on absurd metaphors (competition is just a click away, G wants to be Santa Claus, etc.) in a way that hurts G’s case and makes it seem like G does not really take the regulators (or the need for robust competition) seriously. In the final analysis, G is a company that may not be violating existing antitrust law. But its arrogance and the narrow-mindedness of its internal legal team could lead regulators to expand antitrust law if they view G’s mission as one that is inconsistent with the broad principles that underlie extant antitrust law and policy.
@myronw Chrome OS is a browser…the whole idea bneihd it is related cloud computing, aka. everything you need is online.@WagnerWhile I understand that ‘free’ is superb for the consumer, ‘free’ is not desirable for competition and that’s the main focus of anti-trust issues (‘they’ don’t care about the consumer…). I feel like the end result of all this 10 years down the line will be A) removal of preferential search results for Google sponsored apps B) some concession to the competition with regards to the ‘secret’ search algorithms.It’s not pretty but anti-trust is about competition and the fact is ‘free’ is never really free. Someone has to pay the bills and someone else is losing a sale.