Soft Consolidation In Medicare ACOs: Potential For Higher Prices Without Mergers Or Acquisitions.

Health Affairs
Peter F LyuJ Michael McWilliams

Abstract

Antitrust guidance specifies that participation in Medicare accountable care organizations (ACOs) is sufficient to meet clinical integration standards for separately owned providers to jointly negotiate with insurers. Accordingly, ACO participation may facilitate price increases through a less conventional, "softer" consolidation that would not be categorically challenged as price fixing. Using commercial claims and data on health system membership and ACO participation, we found some abrupt, large price increases for independent primary care practices that joined health system-led ACOs but were not acquired by systems. These price jumps were rare, however, increasing prices by just 4 percent, on average, among all independent practices in system-led ACOs. Additional analyses suggested minimal increases in health systems' primary care prices or market shares from ACO contracting. Thus, the price jumps were more consistent with an extension of existing pricing power from systems to some independent practices than with a major expansion of system market power. Nevertheless, the potential for growth of these arrangements through ACOs argues for closer monitoring and evaluation.

References

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