Researchers Examine Office-Visit Prices Among MD Groups Joining System-Led ACOs
Despite the obvious benefits to patients, communities, and the federal government that the creation of accountable care organizations (ACOs) brings, could the regulations that allow for price increases through ACO participation, including in the Medicare Shared Savings Program (MSSP) actually undermine the overall purpose of previously existing healthcare antitrust regulations, to control healthcare prices? That’s the question that team of healthcare policy researchers wanted to investigate.
Writing in the June issue of Health Affairs, Peter F. Lyu, Michael E. Chernew, Ph.D., and J. Michael McWilliams, M.D., Ph.D. come to a nuanced conclusion in their article, entitled “Soft Consolidation In Medicare ACOs: Potential For Higher Prices Without Mergers Or Acquisitions.” Lyu is a doctoral candidate in health policy at Harvard University (Cambridge, Mass.); Chernew is the Leonard D. Schaeffer Professor of Health Care Policy in the Department of Health Care Policy at the Harvard Medical School (Boston); and McWilliams is the Warren Alpert Foundation Professor of Health Care Policy at Harvard Medical School, and a professor of medicine and general internist at Brigham and Women’s Hospital (Boston).
Essentially, while the researchers identified small number of large price increases popping up inside independent primary care practices that had joined health system-led ACOs but were not acquired by systems, those price increases were rare, with most of them averaging just 4 percent, among those non-owned practices. They did conclude, though, that such price increases should be monitored in the future, as ACO participation grows.
As the article’s authors note, “Mergers and acquisitions have been repeatedly shown to increase commercial prices, but little empirical research exists on less formal modes of provider integration. In some cases, providers that do not combine under common ownership may still negotiate jointly with payers, reflecting a softer form of consolidation. Per guidance from federal antitrust authorities, financially separate providers that bargain together when engaging with commercial payers should not categorically be considered to be violating antitrust law as long as certain conditions are met. These looser arrangements have received relatively little attention, in part because they are difficult to observe.”
What the researchers did in order to study the problem was to conduct two separate sets of analyses. First, the estimated the impact of MSSP participation on fee-for-service office visit prices for those medical practices that remained independent after joining in an ACO contract, focusing on health system-led ACOs. Then they analyzed the extent to which their participation in health systems’ ACO contracts might enhance those health systems’ bargaining positions, simulating potential gains in the health systems’ primary care market share and looking at whether larger potential expansions in market share could be correlated with larger price increases. Their study sample included 1,715 medical practices participating in 177 health system-led MSSP ACOs, and comparing their prices for office visits to those of 1,861 practices participating in 195 non-health system-led ACOs.
The medical practices joining health system-led ACOs were small, with an average size of 2.4 physicians, and billing an average of 141 office visits per physician-year to commercial payers. And, as it turns out, the health systems leading system-led ACOs were larger and had higher prices than organizations leading non-system-led ACOs. The average office-visit prices in the health system-led ACO-participating physician practices were just 0.65 percent greater than those in the control group, though the increase differential grew to 4.05 percent in the “late post period” analyzed.
The researchers wrote that “[P]ractices that joined system-led Medicare Shared Savings Program ACOs received differentially higher prices for office visits relative to control practices not joining ACOs. However, the overall effect was small. On average, practices joining system-led ACOs differentially received 4 percent higher prices by the late post period, largely driven by 7.4 percent of treatment practices receiving a 49.3 percent average price increase. The small size and number of practices in affected system-led ACOs and the absence of effects among practices joining non-system-led ACOs imply a limited impact on overall market prices. Nevertheless, as study practices remained independent from health systems, our results suggest that participation in system-led MSSP ACOs facilitated price increases without mergers or acquisitions,” they wrote.
Ultimately, they wrote that, though the price increases they observed among independent physician practices that had joined health system-led ACOs “might not, at present, warrant as much antitrust scrutiny as other forms of consolidation, they also present cautionary evidence that should prompt further study of the underlying mechanism for such large price increases and further consideration of the basis on which they could be challenged should a greater concern develop.”
