GAO-12-291R Provider Collaboration and Antitrust Policy

United States Government Accountability Office

Washington, DC 20548

March 16, 2012

Congressional Requesters

Subject: Federal Antitrust Policy: Stakeholders’ Perspectives Differed on the 

Adequacy of Guidance for Collaboration among Health Care Providers

Health care delivery in the United States generally is fragmented, with care delivered 

by multiple providers and in multiple care settings, often without systematic 

coordination across providers and settings.1 This can lead to inefficient care delivery, 

poor quality of care, and patient dissatisfaction. There is a growing consensus 

among providers, researchers, and policymakers that collaboration among health 

care providers is essential to addressing these problems. Collaborative 

arrangements can take a variety of forms, including collaborations among 

independent physician groups—called physician arrangements—or among multiple 

types of independent providers—called multiprovider arrangements. For example, a 

physician arrangement could involve a network of primary care physicians and 

specialists, such as cardiologists and radiologists, who contract collectively with 

health plans. Similarly, a multiprovider arrangement could involve a hospital 

collaborating with groups of physicians to contract collectively with health plans. 

Collaborative arrangements may be able to address problems associated with 

fragmented care delivery because providers generally have greater resources and 

ability to coordinate care when collaborating with each other than when acting 

separately. For example, providers within a collaborative arrangement could pool 

resources to use electronic health records (EHR) to obtain timely and relevant 

clinical information and enable them to coordinate patient care across various care 

settings, potentially improving efficiency and quality of care. Or providers 

collaborating with each other could negotiate capitated rates with health plans to 

give these providers a financial incentive to furnish care efficiently.2

 

While collaborative arrangements can have potential benefits, such arrangements 

may lead to higher prices. In a competitive health care market, consumers are able 

to choose from a wide variety of competing providers that have an incentive to 

 

1

Some patients, particularly those with multiple conditions, may receive care from multiple primary 

and specialty providers across different settings, including physician offices and hospitals. 

2

A capitated rate is a fixed amount that health plans pay per patient that covers a specific bundle of 

services for a period of time, such as 1 month, regardless of the amount of these services a patient 

uses. Providers in collaborative arrangements that are paid at a capitated rate have a financial 

incentive to provide care efficiently because they keep the difference if a patient’s actual cost of 

services is less than the capitated amount and lose money if the actual cost of care exceeds the 

capitated amount. 
2 GAO-12-291R Provider Collaboration and Antitrust Policy

furnish the highest-quality services at the lowest cost. However, the providers in a 

collaborative arrangement may be able to negotiate higher prices with health plans 

than would otherwise be expected in a competitive market merely because they 

have agreed to act together in setting fees. While higher prices benefit providers, 

consumers are adversely affected if higher prices for providers result in higher health 

plan premiums. Furthermore, when collaborating providers have the ability to 

negotiate prices in excess of competitive levels, the arrangement may violate federal 

antitrust laws, which are designed to promote market competition.3 

The Federal Trade Commission (FTC) and the Antitrust Division of the Department 

of Justice (DOJ), the agencies that are responsible for enforcing federal antitrust 

laws, have issued general guidance for the business community, and specific 

guidance for health care providers, on the application of these laws.4 One aspect of 

this guidance by the FTC and DOJ (the agencies) describes the analysis they 

undertake to determine whether to challenge a particular collaborative arrangement 

among competing health care providers as unlawful.5 The agencies also issued 

guidance in October 2011 describing their approach to antitrust policy for certain 

collaborative arrangements, called Accountable Care Organizations (ACO), that are 

eligible to participate in the Medicare Shared Savings Program (SSP).6 The SSP is 

intended to promote provider collaboration to reduce costs and improve quality of 

care for Medicare beneficiaries by allowing ACOs to receive a portion of the net 

savings realized as a result of their efforts.7 You asked us to examine how federal 

antitrust guidance may affect the ability of health care providers to collaborate to 

improve health care quality. In this report, we describe the perspectives of 

stakeholders—health care industry groups and experts in antitrust law—on key 

aspects of federal antitrust guidance related to collaboration among health care 

providers. 

To address this research objective, we interviewed officials from the agencies and 

reviewed agency guidance on federal antitrust policy for collaborative arrangements 

in health care. We focused our analysis on physician and multiprovider 

arrangements among providers that (1) were actual or potential competitors and 

 

3

The federal antitrust laws include the Sherman Act, 15 U.S.C. §§ 1-7; the Clayton Act, 15 U.S.C. 

§§ 12-27; and the Federal Trade Commission Act, 15 U.S.C. §§ 41-58.

4

For example, see FTC and DOJ, Antitrust Guidelines for Collaborations Among Competitors

(Washington, D.C.: April 2000), and Statements of Antitrust Enforcement Policy in Health Care 

(Washington, D.C.: August 1996), statements 8 and 9.

5

This report discusses “unlawful” arrangements in the limited context of the agencies’ analysis as 

described in statements 8 and 9 of the Statements of Antitrust Enforcement Policy in Health Care. 

6

FTC and DOJ, Final Policy Statement, Statement of Antitrust Enforcement Policy Regarding 

Accountable Care Organizations Participating in the Medicare Shared Savings Program, 76 Fed. 

Reg. 67026 (Oct. 28, 2011). 

7

Section 3022 of the Patient Protection and Affordable Care Act required the establishment of the 

SSP no later than January 1, 2012. The Centers for Medicare & Medicaid Services (CMS), an agency 

within the Department of Health and Human Services, is responsible for overseeing the SSP. In order 

to participate in the SSP and share in savings resulting from its cost control and quality improvement 

efforts, an ACO must enter into an agreement with CMS for at least 3 years. If the ACO demonstrates 

that it has satisfied the quality performance standards, and meets all other applicable requirements, 

the ACO would be eligible to receive any shared savings. Pub. L. No. 111-148, §§ 3022, 10307, 

124 Stat. 119, 395, 940 (2010) (codified at 42 U.S.C. § 1395jjj).
3 GAO-12-291R Provider Collaboration and Antitrust Policy

(2) shared pricing information or agreed on fees or other terms they would accept 

from health plans.8 The guidance we reviewed included the following: 

• statements 8 and 9 in the Statements of Antitrust Enforcement Policy in Health 

Care, jointly issued by the agencies in 1996 (1996 Statements), which describe 

the agencies’ antitrust analysis for determining whether physician and 

multiprovider arrangements are unlawful;9

• selected advisory opinions, which contain the assessment of FTC staff of 

whether a collaborative arrangement’s specific proposed conduct is likely to raise 

antitrust concerns;10

• other forms of guidance, including a report by the agencies that elaborates on 

their approach to antitrust enforcement policy for collaborative arrangements in 

health care, agency guidelines for collaborative arrangements that apply to all 

industries, including health care, and court cases;11 and

• the Centers for Medicare & Medicaid Services’ (CMS) regulations for the SSP 

and the Statement of Antitrust Enforcement Policy Regarding Accountable Care 

Organizations Participating in the Medicare Shared Savings Program (Policy 

Statement), issued jointly by the agencies in 2011.12 We also asked agency 

officials about the implications, if any, that this statement may have for 

collaborative arrangements outside the SSP.

 

8

Provider groups that furnish similar services—for example, two groups of primary care physicians—

could be considered competitors. However, different types of providers may also compete with each 

other. For example, a hospital that provides diagnostic imaging services may compete with a 

radiology practice that provides similar services. Antitrust guidance that applies to independent 

provider groups that merge to form a single entity was beyond the scope of this report.

9

The 1996 Statements contain agency guidance on mergers and various joint activities in health care. 

We use the term 1996 Statements to refer to the statement addressing physician arrangements 

(statement 8) and the statement addressing multiprovider arrangements (statement 9). The 1996 

Statements updated joint statements that the agencies had issued in 1993 and 1994.

10The FTC issues Commission or staff advisory opinions, and DOJ issues business review letters, in 

response to a request to review specific proposed conduct of a collaborative arrangement. According 

to agency officials, the review of a given collaborative arrangement is generally done by the agency 

with the most expertise with that type of arrangement. Advisory opinions and business review letters 

are applicable only to the parties that requested the review and include DOJ’s or the FTC’s present 

enforcement intentions with regard to the proposed conduct. Neither agency is bound by the views 

expressed in an advisory opinion or business review letter, and each reserves the right to rescind it 

later. Our review included the following FTC advisory opinions, which are notable in part because 

they describe the FTC’s assessment of activities, identified by the proposed collaborative 

arrangements, that might be evidence of clinical integration: TriState Health Partners, Inc. Advisory 

Opinion (2009); Greater Rochester Independent Practice Association Advisory Opinion (2007); 

Suburban Health Organization, Inc. Advisory Opinion (2006); and MedSouth, Inc. Advisory Opinion 

(2002 and 2007). DOJ officials noted that there were no favorable business review letters for clinical 

integration because most requests for such information went to the FTC.

11For example, see FTC and DOJ, Improving Health Care: A Dose of Competition (2004); Antitrust 

Guidelines for Collaborations Among Competitors; Arizona v. Maricopa County Medical Soc., 

457 U.S. 332 (1982); and North Texas Specialty Physicians v. FTC, 528 F.3d 346 (5th Cir. 2008).

12See CMS, Final Rule, Medicare Program; Medicare Shared Savings Program: Accountable Care 

Organizations, 76 Fed. Reg. 67802 (Nov. 2, 2011).
4 GAO-12-291R Provider Collaboration and Antitrust Policy

To obtain the perspectives of providers on key aspects of federal antitrust guidance 

related to collaboration among health care providers, we interviewed representatives 

from three national industry groups representing health care providers, including 

physicians and hospitals. In addition, because health plans play a critical role in 

health care markets, we spoke with representatives from a national industry group of 

health plans.13 We also spoke with six experts in antitrust law related to collaborative 

arrangements in health care.14 In addition, we reviewed publications from these 

industry groups and experts that addressed antitrust policy for physician and 

multiprovider arrangements. 

We identified aspects of federal antitrust guidance that were of concern to 

stakeholders through interviews and a review of their publications. We then focused 

our description of their perspectives on these aspects of the guidance and included 

the agencies’ perspectives in our description. We did not examine stakeholders’ 

perspectives on antitrust guidance for collaborative arrangements participating in the 

SSP because the Policy Statement containing this guidance had not been issued 

when we conducted our interviews with stakeholders. 

We conducted this performance audit from October 2010 through March 2012 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions based on 

our audit objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings based on our audit objective. 

Results in Brief

Stakeholders—health care industry groups and experts in antitrust law—had 

different perspectives on the adequacy of three key aspects of antitrust guidance for 

health care provider collaboration. First, stakeholders’ perspectives differed on the 

sufficiency of guidance on clinical integration, which involves integrating clinical 

activities across providers in a collaborative arrangement. Clinical integration is one 

way for a collaborative arrangement to satisfy the requirement that the arrangement 

demonstrate the potential to yield significant benefits, such as reduced costs or 

improved quality, in order to be able to jointly negotiate prices. Five of the six experts 

and one of the four industry groups said that agency guidance was sufficient, while 

one expert and two industry groups asserted that agency guidance on clinical 

integration was inadequate. Second, stakeholders’ perspectives differed as to 

whether the agencies should permit greater use of exclusive collaborative 

arrangements, which restrict the ability of providers within a collaborative 

arrangement to contract with other arrangements or health plans. The use of 

exclusive arrangements has the potential to improve or reduce competition, 

 

13We interviewed representatives from the following health care industry groups: the American 

Medical Association, which represents physicians; the American Hospital Association; America’s 

Health Insurance Plans; and Premier Inc., which is an alliance of health care providers and health 

systems that promotes collaboration as a way to improve health care delivery. 

14To determine which experts to interview, we identified individuals who have published on the topic, 

and we solicited recommendations from individuals with expertise in this area.
5 GAO-12-291R Provider Collaboration and Antitrust Policy

depending on the circumstances. Four of the experts said that the agencies’ 

guidance on exclusive arrangements was reasonable, while three industry groups 

stated that the agencies should permit greater use of exclusive arrangements. Third, 

stakeholders’ perspectives differed on the adequacy of guidance related to which 

collaborative arrangements are exempt from the antitrust analysis and therefore are 

presumed to be lawful—known as being within a safety zone. One of the four 

industry groups and one of the six experts said the size and scope of the safety 

zones outlined in the 1996 Statements were appropriate, while three industry groups 

and three experts contended that the safety zones should be expanded to include a 

wider range of arrangements. 

Background

Antitrust Analysis

The agencies generally conduct their antitrust analysis in response to a complaint, at 

their own discretion, or at the request of a specific proposed collaborative 

arrangement. This analysis is described in the 1996 Statements and consists of two 

key stages.15

 

15This analysis applies to collaborative arrangements examined by the agencies in response to 

requests made for advisory opinions or business review letters, through complaints from health plans 

or other providers, or as the result of agency-initiated reviews. 

In the first stage, the agencies determine whether the collaborative 

arrangement is inherently anticompetitive, or “per se unlawful.” The second stage, 

triggered when collaborative arrangements are determined not to be per se unlawful 

in the first stage, involves the rule of reason analysis to determine the arrangement’s 

anticompetitive effects. The antitrust agencies may bring antitrust enforcement

actions to challenge collaborative arrangements that appear unlawful. (See fig. 1.)
6 GAO-12-291R Provider Collaboration and Antitrust Policy

Figure 1: Federal Antitrust Analysis of Collaborative Arrangements among Health Care Providers That 

Are Actual or Potential Competitors

a

To determine whether the collaborative arrangement would have potential anticompetitive effects, the agencies would 

consider, among other things, the arrangement’s market share as well as whether the arrangement involves exclusive 

contracting, which could hinder the ability of other providers to form competing arrangements.

The two key stages of the analysis are as follows: 

• Stage 1: Per se unlawful determination. In this stage, the agencies assess 

whether collaborating providers have entered into agreements that are per se 

unlawful. To make this determination, the agencies first evaluate whether the 

collaborative arrangement involves agreements—such as jointly agreeing on 

prices—that are inherently anticompetitive. If so, the arrangement must 

demonstrate the following to avoid being determined per se unlawful:

1. the arrangement has the potential to yield significant benefits—or “significant 

efficiencies”—for consumers (e.g., reduced costs or improved quality) and

2. the arrangement’s anticompetitive agreements and practices are subordinate to and 

reasonably necessary to achieve these potential efficiencies.

The 1996 Statements describe forms of integration among providers in a 

collaborative arrangement that can demonstrate that an arrangement is likely to 

produce significant efficiencies. These forms include financial integration, which 
7 GAO-12-291R Provider Collaboration and Antitrust Policy

is the sharing of substantial financial risk by participating providers, and clinical 

integration, which involves integration of providers’ clinical activities.

Financial integration. A collaborative arrangement can demonstrate that it is 

financially integrated by sharing financial risk across providers in the 

arrangement. Sharing financial risk could involve negotiating capitated rates with 

health plans or subjecting providers to substantial financial penalties based on 

whether they meet the arrangement’s cost or utilization targets.16

Clinical integration. The agencies provided broadly descriptive examples in the 

1996 Statements of the types of clinical activities that collaborating providers 

might undertake to demonstrate clinical integration. For example, the 1996 

Statements noted that a collaborative arrangement involving a physician network 

could demonstrate clinical integration by implementing “an active and ongoing 

program to evaluate and modify practice patterns by the network’s physician 

participants and create a high degree of interdependence and cooperation 

among the physicians to control costs and ensure quality.”17 The 1996 

Statements elaborated on this point by noting that such a program could include, 

for example, the establishment of mechanisms to monitor and control utilization 

of health care services that are designed to control costs and ensure quality of 

care.18 Multiprovider arrangements may also demonstrate clinical integration in 

ways such as this.19 The 1996 Statements also included descriptions of how the 

agencies would analyze hypothetical physician and multiprovider arrangements, 

some of which would be clinically integrated.

In addition to financial and clinical integration, the 1996 Statements indicate that 

collaborative arrangements can demonstrate the potential for significant 

efficiencies in other ways but did not specify such additional forms of integration. 

If the collaborative arrangement demonstrates the potential for significant 

procompetitive efficiencies through integration, the agencies then analyze 

whether the anticompetitive agreements, such as agreements on prices, are 

reasonably necessary for the collaboration to achieve these efficiencies. For 

example, in a 2002 advisory opinion for a physician arrangement, FTC staff

 

16See statement 8, pp. 68-69, and statement 9, p. 109.

17See Statement 8, pp. 72-73.

18The 1996 Statements also noted that activities to demonstrate clinical integration could include 

(1) selectively choosing network physicians who are likely to further the arrangement’s objectives to 

control costs and ensure quality and (2) having a significant investment of capital, both monetary and 

human, in the necessary infrastructure and capability to realize the claimed efficiencies. 

19The agencies also noted that these types of activities may not be relevant to all multiprovider 

arrangements, given the wide range of providers that could participate in such arrangements. As a 

result, the agencies noted that they would consider the particular nature of the services provided 

through the multiprovider arrangement in assessing whether it has the potential to produce 

efficiencies that warrant rule of reason analysis. See statement 9, pp. 110-111.
8 GAO-12-291R Provider Collaboration and Antitrust Policy

found that joint price agreements were reasonably necessary to ensure provider 

participation in order for the physician arrangement to operate effectively to 

achieve its efficiencies.20

• Stage 2: Rule of reason analysis. For collaborative arrangements that the 

agencies determine are not per se unlawful, the agencies proceed to the rule of 

reason analysis to determine whether these arrangements are unlawful. The rule 

of reason analysis primarily involves an assessment of whether a collaborative 

arrangement is likely to have anticompetitive effects—for example, result in 

prices above competitive levels—and if so, whether these potential effects are 

outweighed by any procompetitive efficiencies, such as lower prices and higher 

quality. When assessing potential anticompetitive effects, the agencies examine 

whether providers are capable of raising, and likely to raise, prices in their market 

above competitive levels. The agencies also consider whether a collaborative 

arrangement is likely to prevent or impede the formation or operation of other 

provider collaborations or health plans. In doing this analysis, the agencies 

consider whether providers must contract only through the collaborative 

arrangement—called an exclusive collaborative arrangement—or are able and 

willing to contract independently with payers or through other collaborations.21

When assessing potential procompetitive efficiencies, the agencies may examine 

issues such as the extent to which collaborative arrangements are financially or 

clinically integrated and may also look for other sources of quality improvement 

and cost savings.

Not all collaborative arrangements among health care providers are subject to the 

agencies’ full antitrust analysis. Under the 1996 Statements, if physician 

arrangements fall within a “safety zone,” the agencies will not challenge them absent 

any extraordinary circumstances because they consider these arrangements highly 

unlikely to have anticompetitive effects. To be in a safety zone, a physician 

arrangement must be financially integrated. The safety zone thresholds differ based 

on whether a physician arrangement is exclusive. Exclusive physician arrangements 

fall within a safety zone if they are financially integrated and constitute 20 percent or 

less of the physicians in each medical specialty in the relevant market.22 This 

 

20The staff advisory opinion observed that “In order to establish and maintain the on-going 

collaboration and interdependence among physicians from which the projected efficiencies flow, the 

doctors need to be able to rely on the participation of other members of the group in the network and 

its activities on a continuing basis.” FTC Staff Advisory Opinion, MedSouth, Inc. (2002).

21Arrangements that do not explicitly restrict providers in this way may also be considered exclusive if 

providers do not actually contract outside the arrangement. 

22To fall within a safety zone, the arrangement’s physicians in a given specialty must constitute 

20 percent or less of the physicians with active hospital staff privileges in that specialty in their 

relevant market. 
9 GAO-12-291R Provider Collaboration and Antitrust Policy

percentage is greater—30 percent—for nonexclusive physician arrangements.23,24

To calculate this market share, providers in a physician arrangement first determine 

the geographic market for each of their physician specialties and then determine the 

arrangement’s market share for each specialty. Safety zones do not apply to 

physician arrangements that are not financially integrated or multiprovider 

arrangements of any type. Collaborative arrangements that fall outside a safety zone 

are not presumptively unlawful. Rather, these arrangements may be subject to the 

antitrust analysis to determine whether they are unlawful.

Medicare Shared Savings Program

In October 2011, CMS issued regulations for the operation of ACOs under the 

SSP.25 To participate in the program, ACOs must accept responsibility for at least 

5,000 Medicare beneficiaries and must meet certain eligibility criteria, including (1) a 

formal legal structure that allows the ACO to receive and distribute payments for 

shared savings, (2) a leadership and management structure that includes clinical 

and administrative processes, (3) processes to promote evidence-based medicine 

and patient engagement, (4) reporting on quality and cost measures, and 

(5) coordinated care for beneficiaries.26 CMS monitors an ACO’s performance to 

ensure compliance with eligibility and program requirements, among other things, by 

analyzing claims data and quality data and by performing beneficiary surveys. ACOs 

that meet CMS’s quality performance standards are eligible to receive a share of the 

savings that are below their expenditure benchmarks.27 CMS also holds certain 

ACOs accountable for sharing losses by holding these ACOs liable for a portion of 

expenditures above their benchmarks. CMS may terminate its agreements with 

ACOs that fail to comply with eligibility and program requirements.

The agencies’ Policy Statement provides guidance detailing how the agencies 

analyze under antitrust laws ACOs that are eligible and intend or have been 

approved to participate in the SSP.28

 

23In markets with fewer than five physicians in a given specialty, an exclusive physician arrangement 

otherwise qualifying for a safety zone may include one physician from that specialty and still qualify 

for a safety zone even if it exceeds the 20 percent threshold. Similarly, in markets with fewer than four 

physicians in a given specialty, a nonexclusive physician arrangement otherwise qualifying for a 

safety zone may include one physician from that specialty and still qualify for a safety zone even if it 

exceeds the 30 percent threshold.

The agencies noted that CMS’s eligibility 

24Criteria the agencies use to determine whether a given arrangement is nonexclusive include, for 

example, whether the arrangement limits participating providers’ ability to contract outside the 

network and whether participating providers actually participate in, or contract with, other 

arrangements or managed care plans.

25See CMS, Final Rule, Medicare Program; Medicare Shared Savings Program: Accountable Care 

Organizations, 76 Fed. Reg. 67802 (Nov. 2, 2011). 

26ACOs may include the following types of groups of providers and suppliers of Medicare-covered 

services: ACO professionals (e.g., physicians or physician assistants) in group practice 

arrangements, networks of individual practices of ACO professionals, partnerships or joint ventures 

between hospitals and ACO professionals, hospitals employing ACO professionals, or other Medicare 

providers and suppliers as determined by CMS. 

27The expenditure benchmark is an estimate of what expenditures would have been in the absence of 

the SSP for beneficiaries assigned to an ACO.

28See DOJ and FTC, Final Policy Statement. 
10 GAO-12-291R Provider Collaboration and Antitrust Policy

criteria are broadly consistent with the guidance on clinical integration contained in 

the 1996 Statements and the FTC’s advisory opinions. Therefore, ACOs meeting 

CMS’s eligibility requirements would qualify for the rule of reason analysis as long as 

they participate in the program and use the same legal structure and clinical and 

administrative process used for the SSP for their private, non-Medicare patients. The 

agencies established a safety zone for those ACOs meeting CMS’s eligibility criteria 

that intend to participate or have been approved to participate in the SSP and are 

highly unlikely to have anticompetitive effects. For an ACO to fall within a safety 

zone, independent ACO providers that furnish the same service, such as a physician 

specialty, must have a combined share of 30 percent or less of each type of these 

services in each provider’s primary service area (PSA).29 This safety zone threshold 

does not vary based on whether the ACO involves exclusive contracting among its 

physicians. However, any hospital or ambulatory surgical center within an ACO must 

be nonexclusive for the ACO to fall within a safety zone.30

Stakeholders’ Perspectives Differed on the Adequacy of Antitrust Guidance 

for Health Care Provider Collaboration Related to Clinical Integration, 

Exclusive Collaborative Arrangements, and Safety Zones

Stakeholders we interviewed differed in their assessment of whether federal antitrust 

guidance related to clinical integration, exclusive collaborative arrangements, and 

the size and scope of safety zones was adequate.

Stakeholders Differed on Sufficiency of Guidance for Clinically Integrated 

Arrangements

Five of the six experts in antitrust law and one of the four industry groups said that 

agency guidance was sufficient to enable providers to structure their clinically 

integrated collaborative arrangements to demonstrate the potential for significant 

procompetitive efficiencies. Three of these experts noted that the guidance was not 

impeding providers’ ability to collaborate. In addition, two of the experts stated that 

providers demonstrate the procompetitive efficiencies contemplated by the guidance 

when they take meaningful steps to improve the health of patients through clinical 

integration. Another expert noted that the agencies’ use of broadly descriptive 

examples to illustrate possible ways for providers to clinically integrate gave 

providers the flexibility to develop innovative forms of clinical integration. However, 

two of these five experts observed that although the guidance is sufficient, it would 

be helpful for the agencies to update the 1996 Statements to reflect provider 

practices that have been developed since the statements were issued. For example, 

one expert suggested that the 1996 Statements could be updated to include specific 

 

29These criteria apply to PSAs in which two or more providers furnish that service to patients in that 

PSA. The PSA for each provider is defined as the lowest number of postal zip codes from which the 

ACO provider draws at least 75 percent of its patients. 

30The agencies will allow ACOs to include one physician or physician group per specialty from each 

rural county on a nonexclusive basis and qualify for a safety zone, even if the inclusion of these 

physicians causes the ACO’s PSA share for that service to exceed 30 percent provided that the 

physician’s or physician group’s primary office is in an “isolated rural” or “other small rural” zip code.

They will also allow an ACO to qualify for a safety zone in instances where a participant in the ACO 

has more than a 50 percent PSA share with no other participants within that PSA, as long as it 

contracts on a nonexclusive basis. 
11 GAO-12-291R Provider Collaboration and Antitrust Policy

examples of clinically integrated arrangements that incorporate advances in the use 

and understanding of evidence-based medicine and quality measures. In addition, 

the industry group and one expert believed the agencies would risk stifling 

innovation by channeling providers into the forms of clinical integration specified by 

the agencies if they provided additional guidance. Finally, one expert acknowledged 

that the guidance on clinical integration was clear to experts in antitrust law, but also 

asserted that it may be less clear for providers as well as for lawyers with less 

experience in this area.

In contrast to stakeholders who believed guidance on clinical integration was 

adequate, two of the four industry groups and one of the six experts said that agency 

guidance on clinical integration was inadequate. In particular, two industry groups 

noted that what they perceived as inadequate guidance may have discouraged 

provider collaboration. These two industry groups also noted that providers were 

often uncertain about how to clinically integrate in ways that would demonstrate 

sufficient clinical integration. For example, one industry group said that it was not 

clear, based on antitrust guidance, whether a collaborative arrangement needed to 

address all clinical conditions and include all types of providers or whether it was 

permitted to focus on certain conditions, such as diabetes or stroke. Similarly, the 

expert noted that the outdated nature of the guidance made it difficult to advise 

collaborating providers as to whether their current practices would be sufficient. 

Moreover, this expert said that advisory opinions and business review letters were of 

limited value to providers because they focused on specific circumstances and were 

not necessarily generalizable to other collaborative arrangements.

Another industry group said that agency guidance related to clinical integration was 

problematic because it was indicative of a restrictive approach to antitrust policy. In 

contrast to the 1996 Statements, guidelines for collaborative arrangements in other 

industries do not mention clinical and financial integration as specific ways to 

demonstrate the potential for significant efficiencies.31 According to this group, the 

agencies should focus on the potential for collaborative arrangements to achieve 

efficiencies more broadly, as is the case for other industries, rather than focusing on 

financial and clinical integration.

Agency officials contended that their guidance on clinical integration is sufficient. 

They said that in providing this guidance, they were attempting to give sufficient 

information on how they will assess clinical integration without being overly 

prescriptive and thus limiting the ways in which collaborative arrangements clinically 

integrate. According to the officials, there are many ways to clinically integrate, and 

the ways in which providers do so continue to evolve. In addition, because the FTC 

and DOJ are enforcement, not regulatory, agencies, it would not be appropriate or 

desirable for them to be prescriptive about how providers should integrate their 

clinical operations, a task for which they believed health professionals were better 

suited. Instead of issuing a list of requirements, the agencies issued guidance in the 

1996 Statements that contained broadly descriptive examples of clinical integration 

and also noted the types of questions they ask when assessing such 

 

31See FTC and DOJ, Antitrust Guidelines for Collaborations Among Competitors, for guidelines that 

apply to health care as well as other industries. 
12 GAO-12-291R Provider Collaboration and Antitrust Policy

arrangements.32 The agencies made the guidance sufficiently broad to account for 

new types of clinically integrated collaborative arrangements, and noted that 

providers have used this flexibility to form numerous arrangements intended to 

improve care coordination and interdependence among providers. Furthermore, the 

guidance explicitly noted that collaborative arrangements could integrate in ways 

other than clinical or financial integration to demonstrate the potential for significant 

efficiencies. However, agency officials were not aware of, nor had providers 

proposed, an integrated collaborative arrangement among health care providers with 

significant potential to reduce costs and improve quality that did not involve either 

clinical or financial integration.

In addition to guidance on clinical integration in the 1996 Statements, arrangements 

may obtain guidance through advisory opinions, business review letters, and 

elsewhere. For example, in a 2007 advisory opinion FTC staff described what they 

viewed as evidence of clinical integration, which included clinical activities such as 

the use of evidence-based practice guidelines and EHRs.33 In addition, the agencies 

noted that the eligibility criteria for the SSP, which CMS recently included in its Final 

Rule for the program, serve as another source of guidance upon which providers 

can draw when structuring their clinically integrated collaborative arrangements. The 

Policy Statement notes that these criteria are generally consistent with the agencies’ 

guidance on clinical integration.34 However, agency officials noted that fulfilling the 

SSP eligibility criteria did not automatically mean that the agencies would consider a 

collaborative arrangement as clinically integrated if it was not participating in the 

program, which requires regular monitoring and public reporting of each 

collaborative arrangement’s quality and cost data, among other things. Furthermore, 

agency officials stated that providers should also draw on other sources—such as 

the 1996 Statements and the advisory opinions—when structuring the form of 

clinical integration that would be most effective in addressing potential antitrust 

concerns.

 

32The questions asked by the agencies when assessing whether a clinically integrated arrangement 

has the potential for significant efficiencies address (1) what the collaborative arrangement proposes 

to do, (2) how it would accomplish its efficiency goals, and (3) how joint contracting with health plans 

would help the arrangement accomplish those goals. See FTC and DOJ, Improving Health Care: A 

Dose of Competition. 

33The proposed collaborative arrangement identified activities that evidenced clinical integration, 

including (1) development of a collaborative network of independent primary care and specialty care 

physicians to provide seamless, coordinated care; (2) the monitoring of adherence to evidence-based 

practice guidelines; (3) the sharing of clinical information related to patients receiving care from 

providers in the arrangement; and (4) a decrease in the administrative burden by reducing paperwork 

and time needed to process treatment information. FTC staff concluded that it appeared that the 

arrangement’s proposed program would involve substantial integration. FTC, Advisory Opinion for 

Greater Rochester Independent Practice Association, Inc. (2007).

34FTC and DOJ, Final Policy Statement.
13 GAO-12-291R Provider Collaboration and Antitrust Policy

Stakeholders Differed as to Whether Agencies Should Permit Greater Use of 

Exclusive Collaborative Arrangements

Stakeholders generally acknowledged that exclusive collaborative arrangements 

could be procompetitive or anticompetitive, depending on the specific 

circumstances. For example, one of the four industry groups noted that exclusive 

arrangements could make it easier to adhere to clinical guidelines and care 

processes because providers would follow a single set of guidelines as opposed to 

potentially having to follow several different sets if they contracted with multiple 

collaborative arrangements. Furthermore, this industry group noted that without the 

use of exclusive arrangements, a collaborative arrangement that invests capital in a 

clinical integration program may be at risk of others profiting from this investment—

called free riding. One example of free riding could involve an arrangement that 

charges health plans higher fees to help finance EHRs designed to facilitate care 

coordination and reduce the provision of duplicative services. If the arrangement is 

nonexclusive, the health plan could benefit from this investment without paying the 

higher fee by contracting at lower rates with individual providers in the arrangement. 

Because of the risk of free riding, providers in a nonexclusive arrangement may 

have less incentive to make investments to improve care provision than providers in 

an exclusive arrangement.

Stakeholders also noted that exclusive collaborative arrangements could be 

anticompetitive. For example, one expert in antitrust law noted that an exclusive 

arrangement containing a large portion of providers in a market could be 

anticompetitive by prohibiting its providers from contracting with other arrangements. 

This prohibition could allow the exclusive arrangement to charge higher prices for its 

services by limiting the ability of providers in the market to form competing 

arrangements.

While stakeholders generally agreed that exclusive collaborative arrangements 

could either be procompetitive or anticompetitive, they differed in their perspectives 

on whether the agencies should give collaborative arrangements greater flexibility to 

use such arrangements. Four of the experts we interviewed said that the agencies’ 

guidance on exclusive arrangements was reasonable. In particular, three of these 

experts stated that what they viewed as the agencies’ current preference for 

nonexclusive arrangements was appropriate given the risks of exclusive 

arrangements. Furthermore, one of these experts asserted that the guidance 

allowed for the use of exclusive arrangements in ways that were procompetitive. 

This expert noted that the use of exclusive arrangements among primary care 

physicians had helped a certain multiprovider network achieve some of its clinical 

benefits. In addition, another expert stated that while the lower threshold for the 

safety zone for exclusive physician arrangements was reasonable, agencies should 

be more flexible when evaluating exclusive physician arrangements that operate in 

competitive markets. Specifically, this expert noted that it would be appropriate for 

the agencies to grant additional flexibility to exclusive physician arrangements with 

up to 30 percent market share if there were at least two other arrangements within a 

given market.
14 GAO-12-291R Provider Collaboration and Antitrust Policy

In contrast to the four experts who believed that the agencies’ guidance on exclusive 

collaborative arrangements was reasonable, three industry groups stated that the 

agencies should be more receptive to such arrangements and should expand safety 

zones to allow for exclusive arrangements with larger market share.35 One industry 

group observed that the agencies have not acknowledged the efficiencies that can 

result from exclusive arrangements in the 1996 Statements or in other guidance. 

This group observed that free riding, which was more likely to occur with 

nonexclusive arrangements, can prevent arrangements from realizing potential 

benefits associated with clinical integration. In addition, one legal expert noted that 

he had advised his clients not to use exclusive arrangements because of the greater 

scrutiny that such arrangements receive from the agencies.

Agency officials asserted that antitrust guidance gave arrangements sufficient 

flexibility to use exclusive arrangements in ways that promote competition and that 

numerous organizations currently do so. In particular, the 1996 Statements 

expressly state that the impact of exclusive arrangements on competition varies 

greatly and that exclusive arrangements, under certain circumstances, could 

increase providers’ incentives to achieve their arrangements’ efficiencies.36 In 

addition, agency officials pointed out that exclusive arrangements could promote 

competition in several ways. For example, such arrangements could be 

procompetitive by increasing providers’ incentives to invest in improvements—such 

as EHRs—that are designed to improve efficiency and quality. Agency officials also 

noted that they had spoken with numerous collaborative arrangements about how to 

use exclusive arrangements in ways that were procompetitive. However, agency 

officials said they had not been asked for an advisory opinion or business review 

letter for an exclusive arrangement.

While exclusive collaborative arrangements have potential benefits, the agencies 

have also cautioned providers about the potential anticompetitive effects from such 

arrangements, particularly from those arrangements that have the ability, and are 

likely to, raise prices in their markets above competitive levels. In addition, in a 2009 

advisory opinion for a collaborative arrangement with a large market share, FTC 

staff stated that the nonexclusive nature of the arrangement was of critical 

importance to the agency’s conclusion that the arrangement was unlikely to harm 

competition.37 Finally, in the 1996 Statements, the agencies also have accounted for 

the potential of anticompetitive effects associated with exclusive arrangements by 

establishing a lower safety zone threshold for financially integrated exclusive 

physician arrangements.

The safety zone set forth in the Policy Statement for the SSP, unlike those in the 

1996 Statements, does not differ based on whether the physicians in the ACOs are 

exclusive or nonexclusive to the ACO. Under the 1996 Statements, the safety zone 

threshold is lower for exclusive arrangements than the threshold for nonexclusive 

 

35One industry group also stated that nonexclusive collaborative arrangements should almost always 

be found lawful under the rule of reason analysis because such arrangements are very unlikely to be 

anticompetitive.

36See statement 8, pp. 78-79. 

37FTC, Advisory Opinion for TriState Health Partners, Inc. (Apr. 13, 2009).
15 GAO-12-291R Provider Collaboration and Antitrust Policy

arrangements. Agency officials noted that having the same safety zone threshold for 

exclusive and nonexclusive ACOs under the SSP did not indicate that they had 

reassessed their approach to exclusive contracting for collaborative arrangements 

outside the SSP. They also noted that the safety zone thresholds for the 1996 

Statements and the SSP are not comparable because of the different methodologies 

used to determine whether a collaborative arrangement or an ACO falls within a 

safety zone.

Stakeholders Differed on Whether Size and Scope of Safety Zones Were 

Appropriate

One of the four industry groups and one of the six experts in antitrust law we 

interviewed said the size and scope of the safety zones outlined in the 1996 

Statements were appropriate. The industry group stressed the need for empirical 

evidence to support any expansion of the safety zones and noted that being in a 

safety zone is not required for a collaborative arrangement to achieve procompetitive 

benefits. While the expert agreed with the current size and scope of the safety 

zones, she noted that the agencies should consider evaluating whether changes in 

provider practice since the safety zones were established in 1996 warranted any 

changes in this area.

In contrast to the stakeholders above, three industry groups and four experts 

questioned whether the current safety zones were appropriate. In particular, the 

three industry groups and three of the four experts said that the current safety zones 

should be expanded by including clinically integrated and multiprovider 

arrangements, and the industry groups also said the safety zones should include 

collaborative arrangements with larger market shares. For example, one of these 

groups stated that it was necessary to include a broad range of clinically integrated 

providers—including hospitals, primary care physicians, and specialists—to develop 

a collaborative arrangement that was effective at reducing costs and improving 

quality. However, this group noted that providers were reluctant to develop such 

arrangements because of the lack of a safety zone for clinically integrated or 

multiprovider arrangements. Similarly, this group noted that a safety zone for 

multiprovider networks would be more viable today than when the 1996 Statements 

were issued because these types of arrangements are much more common and well 

established. In addition, two of these experts noted that expanding the safety zones 

to include additional types of arrangements could give more certainty to providers. 

However, they also stated that despite the lack of a safety zone for clinically 

integrated or multiprovider arrangements, it would be surprising if the agencies 

challenged whether such arrangements were lawful if they were below the current 

safety zone thresholds.

Agency officials emphasized that collaborative arrangements that fall outside a 

safety zone are not presumptively unlawful and, further, would not necessarily be 

challenged if these arrangements did not reduce competition or if they ultimately 

generated procompetitive benefits, such as reduced costs and improved quality, that 

outweighed any anticompetitive effects. Additionally, agency officials said that they 

were reluctant to expand the safety zones to account for multiprovider and clinically 

integrated arrangements. In particular, they noted that multiprovider arrangements 
16 GAO-12-291R Provider Collaboration and Antitrust Policy

were highly variable and could include combinations of provider specialties with 

which the agencies are less familiar. They also stated that applying the safety zone 

to clinically integrated arrangements would be problematic because the most

effective forms of clinical integration were not yet well established and were 

continually evolving. Furthermore, they noted that unlike ACOs under the SSP, 

collaborative arrangements outside the SSP will not be subject to regular monitoring 

and public reporting. Agency officials also said they did not plan to increase the 

market share thresholds for the safety zones under the 1996 Statements because 

the potential for anticompetitive effects generally rises as arrangements’ market 

shares increase. Furthermore, they noted that exclusive collaborative arrangements 

within a safety zone may exclude as many as 20 percent of providers from 

contracting with other arrangements in a given market. Increasing this threshold to a 

30 percent market share could lead to a market with only three exclusive 

arrangements available, which they thought might not be sufficiently competitive.

The safety zone outlined for the SSP in some ways may give ACOs greater flexibility 

than the safety zones in the 1996 Statements, but the agencies noted that this 

additional flexibility reflected the structure of the SSP, with its monitoring and 

reporting requirements, and was not an indication that the agencies had reassessed 

the safety zones in the 1996 Statements. Agency officials noted that in contrast to 

the safety zones outlined in the 1996 Statements, the safety zone for the SSP 

includes both multiprovider and clinically integrated arrangements. Agency officials 

said they included clinically integrated arrangements in the safety zone for the SSP 

because clinical integration is a key focus of the program. Furthermore, they said 

they included multiprovider arrangements in the safety zone because many ACOs 

would likely include types of providers, such as hospitals, in an effort to more 

effectively coordinate care. Finally, agency officials noted that a key reason for the 

different safety zone in the SSP was that unlike collaborative arrangements in the 

private market, ACOs in the SSP are subject to quality and cost reporting 

requirements and monitoring that do not exist for arrangements outside this 

program.

Agency Comments

We received technical comments on a draft of this report from DOJ and the FTC, 

which we incorporated as appropriate.

– – – – – 

As agreed with your offices, unless you publicly announce the contents of this report 

earlier, we plan no further distribution until 30 days from the report date. At that time, 

we will send copies to the Attorney General, the Chairman of the Federal Trade 

Commission, and interested congressional committees. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov. 
17 GAO-12-291R Provider Collaboration and Antitrust Policy

If you or your staff have any questions about this report, please contact me at (202) 

512-7114 or cosgrovej@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. GAO staff 

who made major contributions to this report are listed in enclosure I.

James C. Cosgrove

Director, Health Care

Enclosure
18 GAO-12-291R Provider Collaboration and Antitrust Policy

List of Requesters

The Honorable Max Baucus

Chairman

Committee on Finance

United States Senate

The Honorable Michael F. Bennet

United States Senate

The Honorable Al Franken

United States Senate

The Honorable Kirsten Gillibrand

United States Senate

The Honorable Kay Hagan

United States Senate

The Honorable Mark Udall

United States Senate

The Honorable Tom Udall

United States Senate

The Honorable Mark R. Warner

United States Senate
Enclosure I

19 GAO-12-291R Provider Collaboration and Antitrust Policy

GAO Contact and Staff Acknowledgments

GAO Contact

James C. Cosgrove, (202) 512-7114 or cosgrovej@gao.gov

Staff Acknowledgments

In addition to the contact named above, Christine Brudevold, Assistant Director; 

William Black; William A. Crafton; Erica Pereira; Monica Perez-Nelson; and 

Roseanne Price made key contributions to this report.

(290968)
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