PPACA: ACO Market Size Matters

The new accountable care organizations (ACO) may work better if they are more tightly knit in bigger communities and more loosely structured in smaller communities.

America’s Health Insurance Plans (AHIP), Washington, has presented that idea in a paper the summarizes the views of presenters and participants in a conference that AHIP organized in September to explore the ACO concept.

In the past, the federal government has tried to hold down rising health care costs by imposing strict limits on health care providers’ financial relationships with other providers. In recent years, public health programs and private insurers have experimented with paying teams of providers to care for a whole patient, instead of paying for care one service at a time.

The Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA), includes provisions that require the Centers for Medicare and Medicaid Services (CMS) to work with ACOs and give federal agencies the authority to keep antitrust laws, anti-kickback laws, and similar laws from interfering with ACO operations.

AHIP ACO meeting presenters agreed that well-designed ACOs might be able to increase the quality of care and hold down the price, but presenters also agreed that poorly designed ACOs might use undue market power to increase prices without doing much to improve quality.

Meeting presenters noted that a typical U.S. physician can direct about $30,000 in total health care spending every day.