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Archive for the ‘Provider Integration’ Category

Antitrust Market Analysis In Provider Integration

Friday, October 4th, 2013

 Initial Antitrust Market Analysis In Provider Affiliations

antitrust integrated networksAntitrust analysis of potential integrated provider groups necessarily requires identification of the applicable market.  Market share issues cannot be addressed without first knowing the market parameters.  Market analysis has both a geographic and a product component.  In the health care area, the product component involves the specialty area of the physician or other provider involved.  The market may include a specific specialty or may be subject to expansion when there is a degree of functional overlap between specialties.

The geographic nature of the market can involve an extremely complex analysis.  From a planning perspective, it is generally most prudent to begin with the most restrictive definition of the geographic model.  If the network meets market standards based on a conservative market definition, further analysis is not required.  Geographic market definition can be expanded from the most conservative parameters as an exercise in risk assessment.  Based on the degree of market expansion, determinations can be made regarding elements of risk which will in turn help assess whether more complete market definition and analysis is required as a risk assessment tool.  The more conservative market definition is generally where regulators will begin their analysis and is a useful starting point for initial antitrust risk assessment.

Once the market is defined, there needs to be some analysis of the market share that will be represented by the combined group.  The number of physicians in the applicable market can be examined but does not necessarily lead to an accurate indication of market share in any given specialty.  The reality is that not all providers in a given specialty market are “equal” from an antitrust market share perspective.  The degree of market share between similarly qualified providers can be extensive.

Parties who are in the planning stages need to gather enough information to get some feel for market share without spending the money to engage an economist to do a full analysis.  Some cases will be clear on one side or the other.  If the initial conservative analysis does not indicate significant market share problems, the planning can move forward knowing that antitrust exposure is extremely low.  If the conservative market analysis indicates that the merger would result in significant market share, further analysis is required in order to identify and mitigate antitrust risk.

Physician Integration – Some Things Never Change

Tuesday, December 11th, 2012

Physician integration has been around since the early 1990s; at least I have been working on integration transactions since then.  There was a ground swell of integration transactions in the mid 1990s during the “great Clinton health care reform scare.”  I have a post coming soon that will bring back some memories for some of you from those early days of integration.   I was recently reflecting on how physician integration has transformed over the years.  There are some new laws out there and we have more to go on for legal guidance when structuring provider organizations.  On the other hand, a lot of what lies at the core of physician integration, the part where the “rubber meets the road,” has stayed fundementally the same.  Those physicians and groups who have not already thrown the towel in with a major health care system are looking for ways to stay independent.  In many cases, their best bet is to integrate with other independent providers.

Here are a few insights from a health care attorney that has been involved with physician integration for longer than he cares to mention:

  1. Federal and state antitrust laws are still the primary laws governing the structure of these organizations.  Without antitrust laws, physicians would stay in separate groups and just band together informally to contract with managed care plans.
  2. You still need to be clinically or financiallly integrated in order to pass the antitrust “sniff test.”
  3. There is more definition regarding what it takes to become clinically integrated than there was “back in the day.”  That is the good news.  The bad news is that it is probably more difficult to clinically integrate than we thought it would be back in the 1990s.
  4.  Group practices without walls are now called “divisional models” groups and come in all shapes, sizes and forms.  They are still the same thing; but someone thought it would be “cooler” to call them “divisional mergers.”
  5. My guess is that a lot of the “divisional mergers” are actually “failed mergers” waiting to be called out because they have only a very minimal amount of actual integration.  A lot of people are trying to slice the pie to thin and we might just see some of these models be put to the test in the near future.  Some of the new divisional model groups are integrated on a shoestring and the FTC is beginning to look at their structure to determine whether they are truly a “single actor” for antitrust purposes.
  6. The Stark Law has expanded to govern treatment of designated health services in integration transactions.  Back in the day, when we first started doing these transactions, the Stark Law was new and only applied to one line of service, clinical laboratory service; that is unless you were lucky enough to be in a state like Florida that had its own anti-referral law.
  7. Compliance issues have come to the forefront as a significant part of these integration transactions.
  8. Just like back in the olden days, there are plenty of people out there who will tell you exactly what you want to hear.  They usually have something to gain from you moving forward into a combined group; even if the combination is on a shoestring.  I am tempted now to go into a “you might just have an antitrust issue” tirade at this point.  But I will hold off on that for a later post.

 

Physician Specialty Group Affiliations and ACO Involvement

Wednesday, July 18th, 2012

Specialty Affiliations and Mergers – Consider How You Fit Into An Accountable Care Organization

Merging Physician Specialty PracticesOne result of health care reform is a resurgence in affiliations and mergers of specialty practices throughout the country.  The structures of various physician specialty consolidations take a variety of forms, from IPAs, to divisional model groups, through completely integrated group practices.  Each structure raises its own legal considerations and challenges.  Regardless of what structure is used to consolidate specialty practices, the end result must be to create a facility to assure optimal participation under a reformed health care system.  This necessarily will include assuring participation in an Accountable Care Organization.

Specialty groups need to create a structure that does not exclude them from participation in an ACO.  One thing to consider when structuring a specialty group affiliation is the size and market share of the group in relation to the ACO antitrust safety zone that was issued by the Federal Trade Commission and the Department of Justice.  The ACO safety zone provides that an organization that meets the requirements to be an Accountable Care Organization will be considered to be “clinically integrated” under the antitrust laws. The DOJ and FTC state that they will not challenge ACOs that fall within the safety zone, absent extraordinary circumstances.

Normally, an organization that consists of independent competing physicians and other providers cannot jointly contract because an agreement on pricing issues amounts to a per se violation of the antitrust laws.  The goal in structuring such an organization is to provide for clinical and/or financial integration that is sufficient to take the organization out of the per se analysis into what is called the “rule of reason” analysis.  The per se rule means that the organization is automatically deemed to violate the antitrust laws.  On the other hand, the rule of reason involves a weighing of the pro-competitive affects of the organization against the anti-competitive affects.  The ACO Safety Zone amounts to a proclamation by the agencies that groups that meet the requirements to be an ACO will be judged under the more lenient “rule of reason.”

The ACO Safety Zone does not stop there.  It goes on to define when an organization will receive favorable analysis under the rule of reason.  For an ACO to fall within the safety zone, independent ACO participants that provide the same service (a “common service”) must have a combined share of 30 percent or less of each common service in each participant’s service area (“PSA”) wherever two or more ACO participants provide that service to patients from that PSA. The PSA for each participant is defined as the lowest number of postal zip codes from which the participant draws at least 75 percent of its patients, separately for all physician, inpatient, or outpatient services. Thus, for purposes of determining whether the ACO is eligible for the safety zone, each independent physician solo practice, each fully integrated physician group practice, each inpatient facility, and each outpatient facility will have its own PSA.

The Safety Zone adds some elements of certainty that did not exist under the usual “rule of reason” analysis.  For example, the Safety Zone contains a definition of the “market” to be used for purposes of safety zone analysis.  Normally the definition of “market” is a factual issue which makes an antitrust analysis difficult.  For ACO Safety Zone purposes we know that the market is considered to be the lowest number of postal zip codes from which the participant draws at least 75 percent of its patients.

Specialty organizations should keep these numbers in mind when determining the breadth of participation in their organizations.  Less integrated groups such as IPA and divisional model groups should perform this analysis and structure their groups to fall within the ACO Safety Zone.  Larger groups will have troubles plugging into an ACO that wishes to take advantage of the ACO Safety Zone.

These requirements only apply to independent groups.  A fully integrated physician group is considered to be a “single actor” for purposes of the antitrust and is therefore unable to conspire with itself on pricing issues.  This begs the question of what constitutes a “fully integrated” group for purposes of the antitrust laws.  Certainly a group that results from the merger of various practices, all who become employees of the new organization, without the creation of a divisional structure, would be considered to be a “fully integrated group.”  On the other hand, an IPA of individual practices or smaller groups would not be considered to be a “fully integrated” group.  Structures that fall between these two extremes constitute a “gray area.”  A Divisional Model Group or a Group Practice Without Walls, that has very little centralization of governance or activities and maintains most of its structure at the division or practice site level, could potentially raise questions as to whether sufficient levels of integration have been achieved to create a “fully integrated” group.

Because of the sensitivity of IPAs and divisional model structures, it is important that groups consult with competent health care or antitrust counsel who has sufficient sensitivity to these issues.  Failure to properly design a group can lead to future questions about the group’s ACO participation.  For example, if a divisional model contains more than 30% of the providers in the relevant PSA and is “collapsed” for antitrust purposes, the group’s participation in the ACO may be questioned by the ACO organizers.  Divisional models are being used frequently as a method to consolidate physicians because of the relative ease of implementing the structure.  Recently, there have been rumors that the FTC may be examining divisional groups to determine whether they are integrated enough to support them being considered a “fully integrated” group.

The same analysis applies to an IPA which is not financially integrated and includes over 30% of the providers in the local market.  In the end, you do not want to have your purposes of forming the group frustrated because these issues were not properly considered when structuring the organization.

89 New Accountable Care Organizations Announced By CMS

Tuesday, July 17th, 2012

CMS Announces 89 New Accountable Care Organizations

The Centers for Medicare & Medicaid Services (CMS) has announced 89 new organizations that qualify to participate as Accountable Care Organizations (ACOs) under the Medicare Shared Saving Program.  The organizations were announced on July 9, 2012 and include the following organizations:

  • Arizona Health Advantage, Inc, Chandler, Arizona
  • John C. Lincoln Accountable Care Organization, LLC, Phoenix, Arizona
  • Fort Smith Physicians Alliance ACO, LLC, Smith, Arkansas
  • ApolloMed Accountable Care Organization Inc., Glendale, California
  • Golden Life Healthcare LLC, Sacramento, California
  • John Muir Physician Network, Walnut Creek, California
  • Meridian Holdings, Inc., Hawthorne, California
  • North Coast Medical ACO, Inc., Oceanside, California
  • Torrance Memorial Integrated Physicians, LLC, Torrance, California
  • MPS ACO Physicians, LLC, Middletown, Connecticut
  • PriMed, LLC, Shelton, Connecticut
  • Accountable Care Coalition of Northwest Florida, LLC, Pensacola, Florida
  • Accountable Care Partners, LLC,  Jacksonville, FloridaAllcare Options, LLC, located in Parrish, Florida
  • Florida Medical Clinic ACO, LLC,  Zephyrhills, Florida
  • FPG Healthcare, LLC, Orlando, Florida
  • HealthNet LLC, Boynton Beach, Florida
  • Integrated Care Alliance, LLC, Gainesville, Florida
  • Medical Practitioners for Affordable Care, LLC, Melbourne, Florida
  • Palm Beach Accountable Care Organization, LLC, West Palm Beach, Florida
  • Reliance Healthcare Management Solutions, LLC, Tampa, Florida
  • WellStar Health Network, LLC, Marietta, Georgia
  • Advocate Health Partners, Rolling Meadows, Illinois
  • Chicago Health System ACO, LLC, Westmont, Illinois
  • Deaconess Care Integration, LLC, Evansville, Indiana
  • Franciscan AHN ACO, LLC, Mishawaka, Indiana
  • Indiana University Health ACO, Inc., Indianapolis, Indiana
  • Genesis Accountable Care Organization, LLC, Davenport, Iowa
  • Iowa Health Accountable Care, L.C., Des Moines, Iowa
  • One Care LLC, Des Moines, Iowa
  • University of Iowa Affiliated Health Providers, LC, Iowa City, Iowa
  • Owensboro ACO, Owensboro, Kentucky
  • Quality Independent Physicians, Louisville, Kentucky
  • Southern Kentucky Health Care Alliance
  • TP-ACO LLC, Baton Rouge, Louisiana
  • Central Maine ACO, Lewiston, Maine
  • Maine Community Accountable Care Organization, LLC
  • MaineHealth Accountable Care Organization, Portland, Maine
  • Accountable Care Coalition of Maryland, LLC, Hollywood, Maryland
  • Greater Baltimore Health Alliance Physicians, LLC, Baltimore, Maryland
  • Maryland Accountable Care Organization of Eastern Shore LLC, National Harbor, Maryland
  • Circle Health Alliance, LLC, Lowell, Massachusetts
  • Harbor Medical Associates, PC, South Weymouth, Massachusetts
  • Accountable Healthcare Alliance, PC, East Lansing, Michigan
  • Oakwood Accountable Care Organization, LLC, Dearborn, Michigan
  • Southeast Michigan Accountable Care, Inc., Dearborn, Michigan,
  • Essential Health, Duluth, Minnesota
  • Medical Mall Services of Mississippi, Jackson, Mississippi,
  • BJC HealthCare ACO, LLC, St. Louis, Missouri
  • Heartland Regional Medical Center, St. Joseph, Missouri
  • Nevada Primary Care Network ACO, LLC, Las Vegas, Nevada
  • Concord Elliot ACO LLC, Manchester, New Hampshire
  • Barnabas Health ACO-North, LLC, West Orange, New Jersey
  • Accountable Care Coalition of Syracuse, LLC, Syracuse, New York
  • Asian American Accountable Care Organization, New York City
  • Balance Accountable Care Network, New York City
  • Beacon Health Partners, LLP, Manhasset, New York
  • Chautauqua Region Associated Medical Partners, LLC, Jamestown, New York
  • Healthcare Provider ACO, Inc., Garden City, New York
  • Mount Sinai Care, LLC, New York City
  • ProHEALTH Accountable Care Medical Group, PLLC, Lake Success, New York
  • WESTMED Medical Group, PC, Purchase, New York
  • Cornerstone Health Care, PA, High Point, North Carolina
  • Triad Healthcare Network, LLC, Greensboro, North Carolina
  • Mercy Health Select, LLC, Cincinnati, Ohio
  • ProMedica Physician Group, Inc., Toledo, Ohio
  • Summa Accountable Care Organization, Akron, Ohio
  • University Hospitals Coordinated Care, Shaker Heights, Ohio
  • North Bend Medical Center, Inc., Coos Bay, Oregon
  • Coastal Medical, Inc., Providence, Rhode Island
  • Accountable Care Coalition of The Tri-Counties, LLC, Charleston, South Carolina
  • AnewCare LLC, Johnson City, Tennessee
  • Cumberland Center for Healthcare Innovation, LLC, Nashville, Tennessee
  • MissionPoint Health Partners,  Nashville, Tennessee
  • St. Thomas Medical Group PLLC, Nashville, Tennessee
  • Summit Health Solutions, Knoxville, Tennessee
  • BHS Accountable Care, LLC, San Antonio, Texas
  • Memorial Hermann Accountable Care Organization, Houston, Texas
  • Methodist Patient Centered ACO, Dallas, Texas
  • Essential Care Partners, LLC, Austin, Texas,
  • Physicians ACO, LLC, Houston, Texas
  • Texoma ACO, LLC, Wichita Falls, Texas
  • Central Utah Clinic, P.C., Provo, Utah
  • Accountable Care Coalition of Green Mountains, LLC, South Burlington, Vermont
  • Polyclinic Management Services Company, Seattle, Washington,
  • Aurora Accountable Care Organization LLC, Milwaukee, Wisconsin
  • Dean Clinic and St. Mary’s Hospital Accountable Care Organization, LLC,  Madison, Wisconsin
  • ProHealth Solutions, LLC, Waukesha, Wisconsin

John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

Ruder Ware is a member of Meritas Law Firms Worldwide

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