Regulators as Market-Makers: Accountable Care Organizations and Competition Policy

Abstract

Of the many elements animating structural change under health reform, Accountable Care Organizations (ACOs) have drawn the greatest attention. The ACO strategy entails regulatory interventions that at once aim to reshape the health care delivery system, improve outcomes, promote adoption of evidence based medicine and supportive technology, and create a platform for controlling costs under payment system reform. Ambitious aims to be sure. Implementation, however, has proved a wrenching process. This article looks at the intersection of markets and regulation under the Affordable Care Act. Specifically, it analyzes regulatory interventions under the MSSP designed to foster commercial market competition. Assessing prospects for success, it advances several interrelated arguments. First, in fulfilling the regulatory task of implementing the MSSP, regulators needed to be vigilant to protect against the potential that ACOs may have adverse effects on private markets. It finds that because the Centers for Medicare and Medicaid Services (CMS) was overly preoccupied with Medicare program issues and hyper-sensitive to criticism from powerful hospitals, the agency missed an important opportunity in its implementing regulations to prevent exacerbation of provider market power. Because existing legal regimes, especially antitrust law, are severely constrained in their ability to deal with extant provider market power, regulation of ACOs requires a cross-platform regulatory approach that addresses market issues.