Texas Health CareCollaboratives

Kim Van Winkle Chief, Antitrust Section

Spring 2015 Berkeley ACO WorkshopMay 8, 2015

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

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

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

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

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

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).

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.

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.

Contact Information

Kim Van WinkleChief, Antitrust Section

(512) 463-1266kim.vanwinkle@texasattorneygeneral.gov