NEJM: ACOs should foster competition
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“These agencies will be called on to determine how best to ensure that ACOs foster, and don't hinder, competition in healthcare markets," Greaney wrote.
"Economic analyses of the current state of U.S. healthcare markets suggest that they are plagued by both fragmentation and concentration,” he stated. “ACOs offer a much-needed vehicle for integrating healthcare delivery and reducing the well-documented shortcomings of the system that are attributable to payment and organizational features that reward high volume rather than low cost or high quality.”
ACOs do little to address the problem of market concentration, according to Greaney: “Indeed, the ACO phenomenon may well encourage some mergers, joint ventures and alliances that will exacerbate this considerable problem.
“Because most Medicare ACOs are likely to serve private insurers as well, those that exacerbate or entrench provider dominance are likely to raise costs in the private sector, including the commercial and self-insured markets, and may also adversely affect competition among Medicare Advantage plans," Greaney wrote. "The delicate task facing the agencies (the CMS in its role as ACO gatekeeper and the FTC as enforcer of antitrust law) will be to strike a balance that encourages the efficient integration of providers while preventing the formation of anticompetitive monopolies or oligopolies.”
CMS, working with the FTC, can take a number of steps to reduce the risk of anticompetitive effects, suggested Greaney:
- Agencies must be acutely sensitive to the risks posed by overinclusive ACOs—those composed of an unduly large proportion of the hospitals or physicians in their markets. “CMS should not certify ACOs that are likely to inhibit the development of competing ACOs or that will otherwise impede competition in the private insurance market,” wrote Greaney. “In most regions of the country, this approach would constrain large hospitals from forming ACOs with rival hospitals and from locking up key specialty physician groups with exclusive contracts.”
- CMS should insist that ACOs provide transparent and accessible cost and quality information regarding their hospitals and physicians. “Allowing private plans and their customers to monitor, share and publicize such data can improve competition even when providers possess market power,” stated Greaney.
“In places where the creation of competitive ACOs is simply not feasible because of previous merger activity among providers, the CMS and state insurance regulators may have to take more draconian measures, such as directly capping premium increases, when providers’ costs exceed benchmarks established in competitive markets,” Greaney concluded.