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Life Health > Long-Term Care Planning

PPACA: ACO Market Size Matters

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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.

CMS could reduce the risk of antitrust problems by ensuring that each ACO has a share of less than

20% in any given market, the presenters said.

But the Affordable Care Act requires each ACO doing business with Medicare to have the capacity to serve 5,000 patients, and, in small communities, that capacity rquirement means that an ACO might have to include 30% to 50% of the providers in some specialties in its network, the presenters said.

The government might want to do business with smaller, looser ACOs in smaller communities, where building adequate networks can be a problem, and favor the superior risk-sharing capacity of tightly knit ACOs in large communities, where building provider networks is easier, the presenters said.

- Allison Bell


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