Volume 1 No. 2 Spring 2016 similar concepts. The physician evaluating ACO participation should be cognizant of the more complex governance structure, as well as consider active participation. E. Methodology of Distribution of Shared Savings. While Medicare ACO rules require a formal mechanism for the distribution of shared savings among Medicare ACO participants and providers/suppliers, the actual design is left to entity governance. The same is the case with commercial ACOs – there is just no regulatory oversight as is the case with a Medicare ACO.

There is a wealth of whitepaper material describing payment methodologies, a particularly comprehensive one from the Commonwealth Fund, for example.7 Physicians should identify the number and composition of the ACO network, and understand how shared savings payments are distributed within each class of members. The methods vary widely. Physicians should at least consider whether the distribution methodology is meaningful, fair, management and transparent.

Specific questions might entail whether the ACO discloses (i) how much of shared savings are maintained for operations and capital expenditures, (ii) whether there is a division of distribution between classes such as hospitals, physicians, and provider/suppliers, and what the division is within each class; (iii) whether the division is based on patients, RVUs, visits, or some other measure; (iv) whether there is a difference in distribution based on specialty; and (vi) whether the distribution is made at the organization or individual level? Also important is whether the ACO imposes any take-back or claw-back provisions that would impose repayment obligations on a provider that fails to meet criteria or if the ACO overall fails to achieve its goals. F. Conclusion. Evaluating physician participation in an ACO will be difficult for practitioners new to the model; however, ACOs continue the upward trend and the business and transactional attorney should be familiar of the unique facets of this relatively new model of health care networks. 7 Balit and Hughes, Key Design Elements of Shared Savings Payment Arrangements Issue Brief (Commonwealth Fund, Aug. 2011), available at <http://www.commonwealthfund.org/>. American Bar Association Health Law Section Recent Federal Guidance Regarding Certificates of Need Robert H. Schwartz, Butzel Long, Bloomfield Hills, MI On January 11, 2016 the Federal Trade Commission (FTC) and the Antitrust Division of the U.S.

Department of Justice (DOJ) issued a joint statement on Certificate of Need (CON) Laws and South Carolina House Bill 3250. Background The Joint Statement noted that originally state CON laws had laudable goals of reducing health care costs and improving access to care. It is worth remembering that CON laws had their germination under the National Health Planning and Resources Development Act of 1974 where states were required to pass CON legislation to avoid losing certain federal funding. The Joint Statement further noted that after years of experience the CON laws can apparently have the effect of undermining the very goals the laws were intended to achieve. The Joint Statement states that the CON laws have created barriers to entry and expansion and limit consumer choice.

Incumbent firms - those with existing CONs - seek to thwart or delay entry into the market or expansion by others; and finally citing the Phoebe Putney Case, the CON laws “… can deny consumers the benefit of an effective remedy following the consummation of our anti-competitive merger.” Finally the Joint Statement concludes that the evidence does not support that CON laws succeeded in controlling costs or improving quality. The recommendation by the FTC and DOJ is that South Carolina consider repealing its CON laws. There is a minority opinion that takes a different view. The Joint Statement was not the first review of CON laws’ impact on competition.

In 2004, the DOJ and FTC released a report on health care competition issues including CON laws. Further the DOJ and FTC in that review of particular CON laws has encouraged states to consider their competitive impact. The Joint Statement makes specific reference to South Carolina’s CON Program and House Bill 3250. The South Carolina House Bill would repeal South Carolina’s existing CON program effective as of January 1, 2018.

The Joint Statement reviews the impact of CON laws such as South Carolina’s CON law. The Joint Statement notes that CON laws like South Carolina’s raise the cost of entry and expansion; remove, reduce or delay competitive pressure; and prohibit entry or expansion outright upon the denial of a CON. The Joint Statement encourages South Carolina to consider the 4 .