On paper, accountable care organizations (ACOs) and their promise of lower costs and improved quality appear to be just what this country's convoluted healthcare system needs. Realistically, there are many barriers to widespread execution, none of which are more formidable than ACA-weary health plans.
Perhaps it is comments like the one uttered during a New England Journal of Medicine-sponsored roundtable on ACOs by Dr. Lawrence Casalino, chief of the Division of Outcomes and Effectiveness Research and a professor at Weill Cornell Medical College, that have insurers a bit on edge:
"Actually, kind of the holy grail at the end of all this would be where an ACO is large enough and competent enough so payers would basically say, 'Here's the money. You take care of patients. You do it the best way that you know how. There's no utilization management. There's no prior authorization. There's no denying of fee-for-service claims. You just do it the best you can. And we'll be measuring quality and patient experience, to make sure you are not stinting on care.'"
In a perfect word, that would be the case. But the reality is that everyone will protect their own interests, which has health plans knocking on doors not only at the Centers for Medicare & Medicaid Services (CMS), but also at the Federal Trade Commission (FTC) and Department of Justice (DOJ), making sure they're aware that collaboration among already powerful healthcare providers under the ACO model also includes the risk collusion.
In a letter to CMS from America's Health Insurance Plans (AHIP) prior to a public workshop sponsored by the FTC, Office of Inspector General (OIG) and other federal agencies to discuss ACO legal issues, the association expressed its concern that ACOs could potentially be developed with the sole purpose of amassing market power.
AHIP is calling attention to anything and everything that could potentially run afoul of antitrust laws such as prohibitions against physician self-referrals, anti-kickback statutes and civil monetary penalty laws. And it appears the group has some unlikely allies in smaller physician groups who could be left out of the ACO mix as well as consumer advocates who fear that powerful ACOs could limit choices and raise costs.
At the moment, the health insurance industry is being diplomatic saying that it supports the ACO concept as a way to "improve quality and reduce costs for consumers and payers alike," provided regulators allow the exploration and formation of a wide range of structural models. It's even shown willingness to go so far as supporting special "narrowly tailored" exceptions such as safe harbors, waivers, or advisory opinions that would allow beneficial ACOs to skate through antitrust regulations.
But if a health insurance industry that's already irritated by ACA pressures gets even a whiff of impropriety by ACOs, expect it to recall attention to stiff price fixing and collusion laws that have brought down many greats (think Kodak and AT&T).
The ACO has a place in healthcare's future if there is a balance in power between providers and payers. Let's just hope federal regulators can get this tricky issue right.