1. Texas Health Care Collaboratives Kim Van Winkle Chief, Antitrust Section Spring 2015 Berkeley ACO Workshop May 8, 2015

2. Health Care Collaboratives: Texas version of ACOs  Insurance Code Chapter 848  Encourage collaboration and innovation in health care delivery and payment models  Texas Department of Insurance (TDI) will license health care collaboratives (HCCs)  Office of the Attorney General (OAG) must review and decide whether it concurs with TDI antitrust analysis  TDI and OAG have rulemaking authority  No authority for conduct that would be a per se violation

3. Texas Institute of Health Care Quality and Efficiency  Chapter 1002, Health and Safety Code  Study and recommend statewide plan for quality and efficiency of health care delivery  Encourage provider collaboration, effective delivery models and coordination of services  Determine the most effective outcome measures using nationally accredited measures or (if none exist) based on expert consensus  Reduce the incidence of potentially preventable events  Recommend methods to evaluate HCC effectiveness, including alternative payment and delivery systems and the meaningful use of electronic health records by providers

4. HCC’s: Application for Certificate of Authority  Texas Department of Insurance (TDI) adopted rules  OAG Antitrust Section must review applications; TDI cannot approve unless OAG concurs  HCC must identify service area, and demonstrate that it contracts with a sufficient number of PCPs in that area  TDI commissioner must approve or deny within 190 days

5. HCC Approval Standards (TDI)  HCC must demonstrate ‘willingness and potential ability’ to provide health care services in a manner that: Increases collaboration Integrates health care services Reduces the occurrence of potentially preventable events Contains health care costs without jeopardizing quality Compiles, evaluates and reports statistics on performance measures and utilization patterns  HCC has working capital and reserves sufficient to operate

6. HCC Approval Standards (OAG)  Proposed HCC not likely to reduce competition in any market for physician, hospital or ancillary health care services due to: The size of the HCC; or The composition of the HCC, including the distribution of physicians by specialty within the HCC in relation to the number of competing health care providers in the HCC’s geographic market; and  The pro-competitive benefits of the applicant’s proposed HCC are likely to substantially outweigh the anticompetitive effects of any increase in market power.  OAG shall consider the findings, conclusions or analyses of any CMS, FTC and DOJ evaluations of the HCC

7. State Action Immunity Doctrine  The state must clearly articulate a policy to displace competition with regulation, and actively supervise the private anticompetitive conduct. Parker v. Brown, 317 U.S. 341 (1943); Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980).  Requires substantive review of the merits of each proposed anticompetitive act or agreement to determine whether it is consistent with the state’s policy goals.  Standard: “whether the State has exercised sufficient independent judgment and control so that the details of the rates or prices have been established as a product of deliberate state intervention, not simply by agreement among private parties.” FTC v. Ticor Title Insurance Co., 504 U.S. 621, 634-35 (1992).

8. Active Supervision of HCCs  Certificate of Authority review and approval process: Market power screen – proposed HCC “not likely to reduce competition in any market” for provider services. Analogous to provider merger review. Balancing test – pro-competitive benefits likely to “substantially outweigh” the anticompetitive effects  Pro-competitive benefits: improvements in the delivery of high-quality, lost-cost health care through integration and innovative payment models  Anti-competitive effects: supra-competitive pricing achieved through collective bargaining power FTC: Antitrust laws already permit pro-competitive collaboration among competing providers.

9. Ongoing Supervision of HCCs  Post-Certification: Active supervision includes ongoing monitoring to ensure the state-approved HCC is being implemented in a manner consistent with the state’s policy goals.  FTC suggests state must review contracts and fee arrangements with payors.  HCC certificate must be reviewed and re-approved annually.  HCC must report material change in size or composition, which may trigger early renewal evaluation.  TDI and OAG may examine HCC finances and operations, including contracts with payors.  TDI may suspend or revoke certificate for non-compliance.  OAG may investigate anticompetitive behavior.

10. Contact Information Kim Van Winkle Chief, Antitrust Section (512) 463-1266 kim.vanwinkle@texasattorneygeneral.gov