ACOs Won't Deliver Promised Savings, Federal Trade Commissioner Says

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Accountable care organizations (ACOs) will not deliver on their proponents’ promise of reducing costs and improving quality of care, Federal Trade Commissioner J. Thomas Rosch told an audience at the American Bar Association’s Antitrust Law Fall Forum in Washington, D.C., on November 17.

Rosch said ACOs instead have the potential to result in a lesser quality of care and to spark a rise in health care costs. At best, they will offer minimal benefits, he asserted.

“On its face, the Shared Savings Program sounds promising: using financial incentives to reduce costs and improve the quality of care,” Rosch said. "Who could be against that? Nevertheless, I am skeptical that ACOs will actually lead to any net health care cost savings. The available evidence suggests that the cost savings to Medicare will be very small to nonexistent, and there is a substantial risk that any reduction in Medicare expenditures will simply be shifted to payors in the commercial sector.”

Rosch added that health care organizations’ exemptions from anti-trust laws raise the possibility that previously competitive providers could form monopolies if they team up to become ACOs.

“The antitrust agencies recognize that the formation of ACOs raises a number of antitrust concerns, in particular that ACOs run the risk of price fixing if they engage in joint price negotiations, and that they may be able to exercise market power, particularly in rural markets,” he said. “Against the very meager prospects for costs savings, there is a very real risk that some ACOs will be formed with an eye toward creating or exercising market power.”

In the course of his remarks, Rosch also pointed to a Congressional Budget Office (CBO) study that predicted ACOs would yield savings of $5.3 billion over 10 years. He deemed such potential savings not worth pursuing given the risks posed by the new model.

Moreover, he observed, “ACO-like” health care organizations that participate in a pilot program known as the Physician Practice Group Demonstration have yet to demonstrate significant cost savings.

To read the entire contents of Rosch’s speech, click here: http://www.ftc.gov/speeches/rosch/111117fallforumspeech.pdf