When they get excited, I get nervous

When the new ACO rules were released last Thursday, I was on vacation, and didn’t post on them. Sarah Kliff did, though, and also found time to have a cup of coffee with me in Washington, DC. Yesterday, she also wrote a piece on how happy some are with the changes:

[T]he administration did a rewrite: it published a final rule last week that got rid of a lot of the ACO program’s risks and increased its rewards. All those changes, it seems, have health-care providers warming up to the program.

Wonkblog has gotten a first look at a letter AMGA [American Medical Group Association] President Donald Fisher sent to the Center for Medicare and Medicaid Services earlier today, showing how the group has pretty much pulled a U-turn on the program. Here are the key paragraphs (and here the full letter):

All the years I have been following rule making, I have never seen a proposed rule change in its final version as much as was the case for ACOs—and for the better! Thank you and your many colleagues at CMS for listening to AMGA and for being responsive to the commenting public in generally.

Naturally, potential ACO participants must evaluate the framework from their unique circumstances, and take into account the concomitantly issued guidance documents from other agencies, those with primary jurisdiction over anti-trust, tax, anti-kickback and related matters. However, it is my impression that you have succeeded in making the ACO regulations workable and attractive enough to garner an initial volume of voluntary participation to get this idea off to a good start. I am certainly recommending to AMGA members that ACOs, in light of the final rule, clearly warrant their serious consideration.

At the conclusion of the post, Sarah seemed optimistic that ACOs could be a game-changer in health care reform.

I want to share in her optimism. I really do. But one of the reasons that groups like the AMGA are so happy is that they got almost everything they wanted. Initial rumors of the ACO rules predicted that they would be all carrots and no sticks. In other words, doctors would get a bonus for doing well and reducing costs, but face no penalties if they cost too much. That’s not a great way to encourage real behavioral change.Then the initial rules came out, and it turned out there were sticks! I was more impressed.

The new rules, however, got rid of a lot of the sticks again. They even made some of the carrots tastier. I completely understand why medical groups love this, but it doesn’t make those of us who really want to see costs come down feel confident that will occur.

Moreover, this still doesn’t address the real problem that as providers consolidate, they have increased market power, which can lead to spending increases and premium increases. That would be the exact opposite of what people want out of ACOs, and I have not seen this concern yet adequately addressed.

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