Managing Antitrust Risks in Care Collaborations Sharon E. Caulfield, Esq. Leading Age Annual Meeting + Nashville + October 22,2014

The ACA: Targeting the “Triple Aim” Improving the U.S. health care system requires simultaneous pursuit of three aims: Improving the experience of care, Improving the health of populations, and Reducing per capita costs of health care Health Affairs 27, no. 3 (2008): 759–769; 10.1377/hlthaff.27.3.75 www.celaw.com

The Triple Aim Implementation Conditions for Success: enrollment of an identified population, commitment to universality for its members, and an “integrator” that accepts responsibility for all three aims for that population. The Integrator’s Role: partnerships with individuals and families, redesign of primary care, population health management, financial management, macro system integration.

Drivers of the Reform Environment The Integrator of Care will most likely be Hospitals and Medicare Primary Care If outside of Medicare: Supported by payors Value-based relationships Cost: Identify low cost or efficient providers Quality: Identify quality measurements Chronic condition management For LTC: focus on reducing hospital re-admits Focus: low cost high quality (where quality = predictable results and reductions of inefficiency)

Reform Effect on Insurance Types: More Consistent Environment LICENSED INSURANCE PRODUCTS (inc. LTC insurance) REGULATED BY STATE DIVISION OF INSURANCE CONFORM TO FEDERAL MANDATES AND ADDITIONAL STATE MANDATES ERISA AND GOVERNMENT SPONSORED PLANS REGULATED BY US DEPARTMENT OF LABOR CONFORM TO FEDERAL MANDATES GOVERNMENT PROGRAMS (MEDICARE, MEDICAID) REGULATED BY US DEPARTMENT OF HEALTH AND HUMAN SERVICES UNINSURED FEDERAL: TAX EXEMPT, MEDICARE STATES: VARY PATCH WORK OF LAWS & REGULATIONS

Health Care Reform – New Payment Paradigms on Top of Ongoing Systems Medicare/aid Fee for service Critical Access Hospital, ESRD, etc. cost-based reimbursement ASC reimbursements Commercial payor FFS contracts Continuation of Medicare Part C and D plans “New” systems “Shared Savings Model” of PPACA MedPAC hospital proposal: “two-sided model” MedPAC post acute care – bundled payments: http://seniorhousingnews.com/2013/06/14/medpac-bundling-pay-for-post-acute-care-is-the-gateway-to-reform-2 http://innovation.cms.gov/initiatives/bundled-payments www.celaw.com

Medicare Shared Savings Program Accountable Care Organizations ACOs are health care providers that have organized into a legal structure that agree to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are assigned to the ACO

ACO Shared Savings Proposal When Medicare ACO meets or exceeds spending targets for its population, it is rewarded with a share of the overall savings Shared Savings* *Algorithm for shared savings has not been determined

Not many have been formed due to complexity Compliance & Legal Challenges for ACOs Not many have been formed due to complexity Federal Reform State Reform Accountable Care Organizations Stark Credentialing Anti-Kickback Insurance Regulation Visual of some of the challenges Tax Exemption Peer Review Protection Antitrust Tax 9

So -- Not doing an ACO? Bundled Payment Initiative Working with commercial payors This may require developing a joint venture or other collaborative organization to share information about care systems, costs, and quality Take Care: There are antitrust risks

Antitrust regulators are not slacking under the ACA Statement of Antitrust Enforcement Policy regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program www.justice.gov/atr/public/health-care/276458.pdf October 2011 Addresses also informal ACOs, not just MSSP ACOs “The Agencies will vigilantly monitor complaints about an ACO’s formation or conduct and take whatever enforcement action may be appropriate.” www.celaw.com

Antitrust Enforcement post-ACA: A Continuation of Prior Policy See -- Statements of Antitrust Enforcement Policy in Healthcare (1996) www.ftc.gov/reports/hlth3s.pdf What’s ok? The 2011 Statement reiterates: “An ACO that does not impede the functioning of a competitive market will not raise competitive [compliance] concerns.” www.celaw.com

Avoiding Antitrust Problems What Post-Acute Providers Need to Know Key issues = Price fixing = Interference with market forces Both Federal and State enforcement activities are possible

Key Antitrust Concepts Price Fixing: Contract, combination or Conspiracy Among Competitors In Restraint of Trade (A single integrated entity cannot compete with itself) Monopolization: Using a monopoly or conspiring to monopolize Effect is restraint of trade (Monopoly power generally 30% of the geographic or product market) www.celaw.com

Safety Zones per 2011 Antitrust Enforcement Policy Avoid monopoly power: Single provider of each service line has 30% or less of the work within the service area If there is a dominant provider, e.g. the hospital, the hospital is non-exclusive with this collaborative group www.celaw.com

Good Guidance to Show General Antitrust Awareness Avoid: Sharing competitive information that is not necessary for the collaboration E.g. pharmacy or labor pricing Setting specific prices for services among competitive, non-integrated post-acute care providers – NO to Price Fixing E.g. a standardized per diem rate, a standard rate for outpatient physical therapy, a standard transportation rate, without integration www.celaw.com

Good Guidance to Show Antitrust Awareness Demonstrate: Comparative Effectiveness and Quality Data Benefits Management for Cost Control E.g. pharmacy, chronic diseases, claims integrity Patient Care Improvements Shared communications, technology, data, physician/staff education Additional Services Enabled by Collaboration E.g. home care followup; nutritional services, family support www.celaw.com

THANK YOU! Sharon E. Caulfield, Esq. Caplan and Earnest LLC 1800 Broadway, #200 Boulder, CO 80302 303-443-8010 scaulfield@celaw.com www.celaw.com www.celaw.com