Accountable Care Organizations

Transcription

1 Competition and Integration: Accountable Care Organizations Nuffield Trust, Sept. 12, 2011 H.E. Frech III University of California, Santa Barbara

2 What is an ACO? A vision & proposal A collaboration of providers accountable for: Measured quality Reductions in the growth of spending ACO keeps some of shared savings relative to a benchmark H.E. Frech III, Sept. 12,

3 Proposed ACO features Beneficiaries don t join, or even know Beneficiaries attributed ex post ACO responsible for all costs of its members, even if outside of ACO Must meet quality level for shared savings H.E. Frech III, Sept. 12,

4 ACO Benchmark Costs What the beneficiaries who would have been assigned actually spent Adjusted for risk and overall cost increases Note: based on the ACO providers own previous performance Rewards past inefficiency H.E. Frech III, Sept. 12,

5 ACO Shared Savings Complex Must exceed a min (2-3.9%) Based on savings over 2% (most ACOs) Extra amounts certain populations Small 50-60% of savings Capped at 7.5 or 10% of benchmark H.E. Frech III, Sept. 12,

6 ACOs Highly Regulated Quality Risk selection Communication with beneficiaries Distribution of shared savings Governance Management Evidence-Based Guidelines H.E. Frech III, Sept. 12,

7 Goals of ACOs Savings of managed care for fee-for-service (Medicare fee-for-service poorly designed) Hard decisions decentralized: less politics; more economics Soft, indirect managed care for all Beneficiaries join without even knowing H.E. Frech III, Sept. 12,

8 ACO Design Constrained by U.S. Politics Provider focus not health plan managed care Health plans and managed care have been demonized Still popular in actual market choices New name: ACOs Avoid mention of nonprice rationing H.E. Frech III, Sept. 12,

9 Manage Care Popular in Market In spite of demonization Late 1990s backlash Recent debates In 2006 group market 93% share 20% HMO 60% PPO 13% POS (Point of Service a sort of PPO) H.E. Frech III, Sept. 12,

10 Prototypes of ACOs Large multispecialty group practices Independent practice associations Especially common in California Often accept capitation from health plans, especially in California H.E. Frech III, Sept. 12,

11 ACO Risk: Harm to Competition Collaborations of otherwise competing providers Harm competition, raise prices and costs Vertical v. horizontal integration H.E. Frech III, Sept. 12,

12 Vertical Integration and Competition Vertical integration useful for efficiency and cost control E.g., decide level of specialization or sophistication of care E.g., information flow among hospital, specialists E.g., implement sensitive nonprice rationing Vertically integrated organizations compete H.E. Frech III, Sept. 12,

13 Horizontal Integration and Competition Certain amount can be pro efficiency E.g., a degree of choice within organization But, much bigger threat to competition This can confer a great deal of monopoly power like a cartel H.E. Frech III, Sept. 12,

14 Fixed or Variable Prices Collusion against a fixed price system leads to lower quality and more nonprice rationing Long run, pressure to raise prices Collusion against variable price system leads immediate to higher prices and costs Possibly much more serious social cost H.E. Frech III, Sept. 12,

15 Experience with Prototypes in California Obtained a great deal of market power Drives substantially higher prices Often outweighs the HMO advantages of integration and incentives for less utilization Plans trying to shift members from HMOs to PPOs to avoid group bargaining of IPAs (Berenson, Ginsburg and Kemper, 2010) H.E. Frech III, Sept. 12,

16 Antitrust Policy Response to ACOs Focused primarily on risk of collusion against private payers Legal safe harbors, market share < 30% Mandatory review, market share > 50% Hospital must not be exclusive Preference for physicians to not be exclusive H.E. Frech III, Sept. 12,

17 Actual Managed Care Dominant in market Important in Medicare (Advantage) Started 1985, unstable policy Growing again, 21 % of Medicare, % HMO 5% PPO (McGuire, Newhouse, Sinaiko, 2011) H.E. Frech III, Sept. 12,

18 Managed Care Features Takes full risk Consumers must choose to join Mostly organized by contract, not employees Strong incentive to constrain use by utilization controls (i.e. nonprice rationing) Some nonprofit, some profit-seeking H.E. Frech III, Sept. 12,

19 Summary: Prospects for ACOs As proposed, may not work Weak incentives small shared savings Complex and burdensome regulation May have to be more like regular managed care to attract actual much partcipation Competition needs to be protected by both antitrust and regulation H.E. Frech III, Sept. 12,

20 Selected ACO References, Frech, Sept. 12, 2011: Robert A. Berenson, Paul B. Ginsburg and Nicole Kemper, Unchecked Provider Clout In California Foreshadows Challenges To Health Reform, Health Affairs, 29, no.4 (2010): (published online February 25, 2010; /hlthaff ), Federal Trade Commission, Department of Justice Antitrust Division, Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program, Federal Register / Vol. 76, No. 75 / Tuesday, April 19, 2011 / Notices, Elliott S. Fisher, Douglas O. Staiger, Julie P.W. Bynum and Daniel J. Gottlieb, Creating Accountable Care Organizations: The Extended Hospital Medical Staff, Health Affairs, 26, no.1 (2007):w44-w57, (published online December 5, 2006; /hlthaff.26.1.w44), John K. Iglehart, Assessing an ACO Prototype Medicare s Physician Group Practice Demonstration, New England Journal of Medicine, 364;#, January 20, 2011, pp , Robert F. Leibenluft, J.D, ACOs and the Enforcement of Fraud, Abuse, and Antitrust Laws, New England Journal of Medicine, 364;2 (January 13, 2011), pp Thomas G. McGuire, Joseph P. Newhouse, and Anna D. Sinakiro, An Economic History of Medicare Part C, The Milbank Quarterly, Vol. 89, No. 2, 2011 (pp ), Barak Richman, H.E. Frech, and Thomas Greaney, Resisting Another Threat to Competition in Health Care, FTC: Watch, No. 783 (April 15, 2011), Posted on American Antitrust Institute. Website (April 18, 2011), Stephen M. Shortell, PhD, MBA, MPH, Lawrence P. Casalino, MD, PhD, Health Care Reform Requires Accountable Care Systems, JAMA, July 2, 2008 Vol 300, No. 1, pp , H.E. Frech III, Sept. 12,