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AHIP: Don't give providers too much power in ACOs

Insurance plan executives are warning federal officials that accountable care organizations (ACOs) could amass an unhealthy amount of market power for hospitals and doctors and urging the government to limit their bargaining leverage.

In a letter to the Centers for Medicare and Medicaid Services (CMS), America's Health Insurance Plans (AHIP) said contract negotiations between providers and health insurance plans are always tension-filled as each side tries to get a better deal from the other. By allowing medical providers to bond together, ACOs would tilt the balance of power in the direction of the hospitals and physicians, according to CQ HealthBeat.

The danger, AHIP said, is that major hospitals and popular physicians will team up together and create an ACO that insurers feel they must include in their networks. The ACO would be in a better position to dictate terms and payments from the insurer than the hospitals and physicians would separately, which could lead to "reduced competition and higher prices," CQ reports.

AHIP said CMS shouldn't create incentives for ACOs to achieve savings in federal programs by increasing costs in the private market. In its comments, AHIP also warned of the harmful effects of provider consolidation if one ACO were to grow and enroll the majority of patients in a given area, notes MedPage Today.

According to Becker’s Hospital Review, AHIP is specifically recommending that CMS:

  • bars providers with large market share from ACOs,
  • require ACOs to report quality and price metrics to antitrust enforcers,
  • prevents cost-shifting from public to private ACOs,
  • limits ACO exemptions from fraud and abuse laws,
  • subjects ACOs' insurance functions to the same standards as insurers,
  • requires ACO infrastructure allows for care coordination, risk assessment and patient outreach,
  • requires ACO membership must ensure appropriate sample size and capability to manage a range of diagnoses and diseases,
  •  requires sufficient investment to ensure ACOs can provide appropriate and timely access to clinical and administrative support,
  • attributes ACO members prospectively,
  • sets a high threshold for accruing shared savings, and
  • limits bonus payments to ACOs.

To learn more:
- read the CQ article (reg. required)
- read the MedPage Today article
- read the Becker’s Hospital Review story
- read the AHIP letter

Related Articles:
Lawmakers hope accountable care organizations control healthcare spending
Humana (NYSE: HUM), Norton form ACO
Anthem Blue Cross: 'At the forefront of the ACO movement'

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