Accountable Care Organizations — a key component of President Obama’s new health care overhaul — might be all the rage in the world of health care, but members of Congress focused Friday morning on whether the new integrated-care networks could end up reducing competition and raising prices.
“I recognize that, at least in theory, consolidation can lead to greater efficiencies and improved outcomes,” said Rep. Wally Herger, California Republican and chairman of the health subcommittee of the House Ways and Means Committee. “Unfortunately, research has shown that higher prices are more often the result.”
By linking providers together to provide patients with a spectrum of care, ACOs are seen as a way to bridge the frequent disconnect between doctors and hospitals that can result in duplicative services and lack of coordination. They’re a big focus in the Mr. Obama’s Affordable Care Act, which allows ACOs to contract with Medicare beginning in January 2012.
But some lawmakers fear that consolidation would allow providers to demand higher reimbursement rates from private insurance companies due to greater market power. Some studies have shown that hospitals charge higher prices after they merge.
To guard against reduced competition, the administration announced in March stronger antitrust measures that will create “safety zones” for some ACOs and establish faster antitrust reviews for others. “This guidance will help ensure that ACOs meet their goals of improving quality and lowering costs while minimizing the regulatory burden on health care providers,” said Federal Trade Commission Chairman Jon Leibowitz at the time.
David Balto, a senior fellow at the Center for American Progress, stressed the need for antitrust enforcement in order to maximize the benefit ACOs can bring for patients. “There’s a tremendous need for consolidation,” he said. “Fortunately, antitrust legislation has been ramped up in this area.”
The new health care law includes a number of other reforms to how health care is paid for, including testing a “bundling” method where a group of Medicare providers can contract to care for a patient and receive in return a lump-sum payment. Policymakers agree that a key to reducing rapid health care inflation is changing payment structures.
“Unless we get a grip on the incentives system, we’re going to be spinning our wheels,” said Rep. Ron Kind, Wisconsin Democrat. “We’re not going to change how we pay for one-fifth of the economy overnight, but that has to be the goal.”