Structuring Medicaid Accountable Care Organizations to Avoid Antitrust Challenges

Abstract

Faced with increasingly inefficient, costly, poor quality, fragmented medical care for their citizens, several states are adopting accountable care organization (“ACO”) models of care delivery to improve access to quality health care while trying to bend the cost curve. ACOs are not one-size fits all delivery systems, however, and states are testing different models to see what works best for their needs. Some States are focusing their efforts on developing Medicaid ACOs, which may “offer a useful framework through which payers, providers, and communities can radically restructure care delivery to improve care for low-income patients and reduce system costs.” New Jersey is on the forefront of State efforts to develop safety net ACOs to provide essential health care to their most vulnerable populations. On August 18, 2011, New Jersey enacted the Medicaid Accountable Care Organization Demonstration Project. Although this pilot project shares some features with other ACOs developed at the State and national level, it has been described as “unique in its ground-up, community-based approach” pursuant to which a single ACO serves a defined geographic area. While this approach brings the community together to address entrenched, systemic fragmentation, the degree of market share and collaboration among potential competitors raises antitrust concerns.

This Article explores two possible responses to these antitrust concerns, clinical integration and the state action doctrine. New Jersey is presently drafting regulations to implement its demonstration project. By structuring Medicaid ACOs to reflect these doctrines, the State should be able to mitigate anticompetitive threats and avoid Federal antitrust liability. Failure to do so, however, could jeopardize the success of the pilot because providers are less inclined to seek to form an ACO if they face potential or even uncertain antitrust liability. ACOs and antitrust regulation share the common goals of controlling costs while improving quality, and thus New Jersey should be able to be harmonize its pilot with antitrust principles.

Keywords: accountable care organizations, Medicaid accountable care organizations, antitrust, state action, clinical integration