Texas Health Care Collaboratives Kim Van Winkle Chief

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

Health Care Collaboratives: Texas version of ACOs 4 Insurance Code Chapter 848 4 Encourage collaboration and innovation in health care delivery and payment models 4 Texas Department of Insurance (TDI) will license health care collaboratives (HCCs) 4 Office of the Attorney General (OAG) must review and decide whether it concurs with TDI antitrust analysis 4 TDI and OAG have rulemaking authority 4 No authority for conduct that would be a per se violation

Texas Institute of Health Care Quality and Efficiency 4 Chapter 1002, Health and Safety Code 4 Study and recommend statewide plan for quality and efficiency of health care delivery 4 Encourage provider collaboration, effective delivery models and coordination of services 4 Determine the most effective outcome measures using nationally accredited measures or (if none exist) based on expert consensus 4 Reduce the incidence of potentially preventable events 4 Recommend methods to evaluate HCC effectiveness, including alternative payment and delivery systems and the meaningful use of electronic health records by providers

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

HCC Approval Standards (TDI) 4 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 4 HCC has working capital and reserves sufficient to operate

HCC Approval Standards (OAG) 4 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 4 The pro-competitive benefits of the applicant’s proposed HCC are likely to substantially outweigh the anticompetitive effects of any increase in market power. 4 OAG shall consider the findings, conclusions or analyses of any CMS, FTC and DOJ evaluations of the HCC

State Action Immunity Doctrine 4 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). 4 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. 4 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).

Active Supervision of HCCs 4 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.

Ongoing Supervision of HCCs 4 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. 4 FTC suggests state must review contracts and fee arrangements with payors. 4 HCC certificate must be reviewed and re-approved annually. 4 HCC must report material change in size or composition, which may trigger early renewal evaluation. 4 TDI and OAG may examine HCC finances and operations, including contracts with payors. 4 TDI may suspend or revoke certificate for non-compliance. 4 OAG may investigate anticompetitive behavior.

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