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

Thomas L. Greaney.

Of the many elements animating structural change under health reform, Accountable Care Organizations (ACOs) have drawn the greatest attention. Supported by scholarship from health policy experts and positioned as the Affordable Care Act’s centerpiece for systemic reform, the concept came to represent a potential cure-all for the disorders plaguing American health care. While the program, entitled the Medicare Shared Savings Program (MSSP), focuses on Medicare payment policy, its objectives extend much farther. 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. Because the law entails seismic change requiring norm-shifting, institution building, and law reform, interest groups did not remain quiescent. Moreover, the ACO strategy calls upon disparate governmental entities to cooperate (and in many cases, cede regulatory turf), and asks the private sector to respond responsibly to changes that are rife with possibilities for opportunistic behavior. The regulatory undertaking itself is far reaching—perhaps unprecedented—in its goal of “nation building”: fostering institutions that will counter market failure and shift embedded incentives and practices in medicine. Given the abject state of health care markets, a central question is whether implementing regulations and legal standards are adequate to achieve the hoped-for rationalization of health care delivery and financing.

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