Officials to hear concerns about health-care law from providers, insurers

Doctors and hospitals eager to pursue a new model of health care being promoted by the Obama administration are raising concerns that they could run afoul of antitrust and anti-fraud laws, and insurers are warning that the new arrangements could lead to higher prices for medical care.

The differences will be hashed out Tuesday, when hundreds of health-care representatives are to attend a meeting with federal officials in Baltimore. The session is being conducted by the Federal Trade Commission, the Centers for Medicare and Medicaid Services and the Office of the Inspector General of the Health and Human Services Department.

A key part of the health overhaul law encourages the development of accountable care organizations (ACOs) which would allow doctors to team up with one another and with hospitals in new ways to provide medical services. Health-care providers want to make sure that their ACOs won't be accused of stifling competition or trying to fix prices when they bargain with insurance companies. Insurers, meanwhile, are expressing concern that providers could use the leverage of the organizations to demand higher prices.

Whether ACOs, which are just a concept, can be made to work might determine whether the health-care law succeeds in lowering costs and improving care for consumers. As envisioned by the law, the organizations would be paid to cover costs for Medicare beneficiaries in a given area and get financial rewards if they meet quality and cost-saving targets.

The federal health program for the elderly and disabled is to start trying out ACOs in 2012, and some providers are scrambling to figure out how to apply the idea to privately insured patients as well. The antitrust rules mostly concern the private insurance market; in Medicare, the government sets the payment rates.

Today, most hospitals and doctors work independently of one another, which experts say tends to drive up costs and hurt quality.

"ACOs could transform the way care is delivered and financed, and we want the government agencies to take a fresh look at how antitrust and antifraud laws apply," said Chet Speed, vice president of policy at the American Medical Group Association, which represents large physician groups. "This open dialogue could be the first step to overcoming these legal obstacles."

The new ACOs could mimic, for example, the tightly integrated Mayo Clinic, though other variations will probably be tried.

In the lead-up to the meeting, the hospitals and doctor groups asked regulators for clear, "user-friendly" guidance to make sure they do not violate federal laws in forming ACOs. Speed said his members do not want to spend $1 million to form an ACO without knowing whether it will be demed legal.

But America's Health Insurance Plans, the insurers' trade group, warned government officials against being too accommodating. It said in a recent letter that ACOs will not help consumers "if they are mere vehicles for price fixing."

Cory Capps, an economist at Bates White Economic Consulting, said that "we could end up in the worst world," in which the delivery of care is not made more efficient but providers accumulate "greater pricing power."

A few health-care systems around the country are already embracing the notion of ACOs and are developing them for their private insurance business.

In February, two competing hospitals in Omaha, the Nebraska Medical Center and Methodist Health System, announced they would form the Accountable Care Alliance to reduce duplication of services, limit unnecessary tests and increase communication between doctors and hospitals. Rita Potter, who is on the board of the alliance, says officials realize there's a risk in going ahead so soon, but concluded that "we just couldn't wait."

Kaiser is an editorially independent news service and a program of the Kaiser Family Foundation, a nonpartisan health-care policy organization that is not affiliated with Kaiser Permanente.