ACO Alerts: Antitrust & Exempt-Status Implications

The IRS wrote that a charitable organization’s participation in the shared savings program through an ACO will not “result in inurement or impermissible private benefit to the private party ACO participants” if the ACO is structured to give consideration to five factors:

1. The tax-exempt organization’s portions of shared savings, losses, and expenses are stated in a written agreement “negotiated at arm’s length.”
2. CMS has accepted the ACO into its program.
3. The share of economic benefits is proportional to the benefits or contributions the tax-exempt organization provides.
4. The exempt organization’s share of the ACO’s losses doesn’t exceed the share of economic benefits.
5. All contracts and transactions entered into by the tax-exempt organization are at fair market value.

Regier says the IRS “clearly said that none of these factors have to be satisfied in every circumstance … and it still won’t jeopardize the exempt status.”

The 18-page DOJ and FTC policy statement and the 7-page IRS fact sheet offer healthcare leaders comprehensive guidance on how to avoid antitrust violations and exempt status missteps. If your organization decides to pursue an ACO, keep these guidelines in mind, and expect a watchful eye from the government.

Editor’s Note: With contributions from John Commins.