Monday, December 27, 2010

The Federal Trade Commission and Accountable Care Organizations: Networks, Pricing and Cost Controls

At first glance, it's a good idea that should be able to stand on its own two feet. Promote the "accountable" coordination and integration of providers that link both quality and savings. Reduced numbers of hospitalizations, avoided visits to pricey specialists and less emergency room crowding will free up hundreds of millions of dollars. After the Feds and other insurers take their cut, those savings can be shared with the providers in upside risk arrangements named "Accountable Care Organizations" or ACOs. Set it up, stand back and let the good times roll, right?

This New England Journal Perspective points out that it's not going to be that simple. It wasn't until now that the naive Disease Management Care Blog appreciated that two, not one, Federal agencies will jointly face the "delicate task" of midwifing ACOs. While it will be up to CMS to assure that ACOs meet the statutory requirements in the Accountable Care Act, another set of hands from the Federal Trade Commission (FTC) will guard against anti-competitive price-fixing bad behavior (for example) by ACO wannabe hospital-physician groups.

To accomplish this, the Perspective author and health care and antitrust lawyer Thomas Greaney recommends that the FTC:

1) clip the wings of overly inclusive arrangements that lock up key physician groups or hospitals that lead to local monopolies. The idea is to make sure that other local health care providers can provide a credible and competitive alternative

2) insist on transparent cost and quality information so that it anti-competitive arrangements (like "most favored nation" clauses) can be spotted early and

3) not be afraid to mandate insurer premium caps and, by inference, hobble the providers' ability to raise prices.

Egads! says the DMCB. The already delayed ACO "proposed rule" regulations promise to be four times as complicated thanks to the involvement of two sets of regulators. Having the FTC define local ACO networks, dive into the small print of contracting arrangements and set prices sounds suspiciously like setting power utility rates at best and old style Poliboro central planning at worst.

Is the potential of ACO's so wonderfully stupendous that the U.S. would have to resort to this level of government involvement and detail to make them work?


Vince Kuraitis said...

Jaan, ...the nightmare gets even worse...the US Department of Justice also has jurisdiction over antitrust issues. V

Jaan Sidorov said...

Where does the DOJ end and the FTC begin?