Understanding 'Soft Consolidation' Among Medicare ACOs

Researchers found that ACO participation may facilitate price increases that would "not be categorically challenged as price fixing."

ACO participation may lead to price increases, but that is more likely a result of the extension of existing pricing structures rather than an expansion of system market power, according to a Health Affairs study released Monday afternoon.

Researchers from Harvard University and Harvard Medical School examined commercial claims along with data on health system membership and ACO participation to determine that some independent primary care practices, that were not acquired by systems, experienced "abrupt, large price increases" after joining system-led ACOs.

The price jumps were described as "rare" and increased prices by an average of 4% among independent practices in system-led ACOs, according to the study. 

The increases for independent practices were consistent with joint price negotiation with the respective ACOs' health systems, usually occurring after the start of "permissible joint contracting outlined by the antitrust ACO guidance." The study also stated that mechanisms other than joint negotiation "may lead to price increases but appear inconsistent with our results."

Researchers found that ACO participation may facilitate price increases that would "not be categorically challenged as price fixing."

Given the "potential for growth of these arrangements," the study argued for closer monitoring going forward. 

"Many questions regarding the scope and value of jointly contracting networks remain unanswered. In our study, price jumps constituted suggestive evidence of joint price negotiation but might not have captured the full extent of joint contracting," the researchers wrote. "The effect of Medicare ACOs as a facilitator for these arrangements could also evolve as ACO contracting expands and health systems account for a growing share of participants."

Related: UHS: ACOs Saved Medicare $90M in 2019

The Health Affairs study is the latest research into the financial implications of ACOs.

A study published in the Annals of Internal Medicine in June 2019 found that high-cost patients and high-cost doctors were much more likely to exit ACOs than low-cost patients and doctors.

The study also concluded that ACOs in the Medicare Shared Savings Program (MSSP) did not show improvement in spending or quality after the selective dropping of clinicians and their patients from the program.