ACOs take heat from FTC commissioner

January 12th, 2015

Accountable care organizations (ACOs) not only won’t save Medicare much money, but may end up lowering health care quality, according to J. Thomas Rosch, a commissioner with the Federal Trade Commission.

Rosch made his remarks November 17 before the ABA Section of Antitrust Law Fall Forum in Washington, DC. “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,” he said.

He added that the CBO’s projection of $5.3 billion in Medicare savings over the next ten years is “likely overstated,” and that even if it’s not, “the savings to Medicare from the ACO program are no more than a rounding error” given that Medicare spending over the same period will probably top $7 trillion.

Further, Rosch expressed antitrust concerns: “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 concluded, “Against the very meager prospects for cost savings, there is a very real risk that some ACOs will be formed with an eye toward creating or exercising market power. The net result of the Shared Savings Program may therefore be higher costs and lower quality health care – precisely the opposite of its goal.”

Rosch noted that he wasn’t speaking for the FTC or its other commissioners, but it’s hard not to wonder how widespread this sort of skepticism is among the various regulatory agencies. Stay tuned.