35 Pages Posted: 9 Oct 2012
Date Written: January 1, 2012
While much academic scholarship about the Patient Protection and Affordable Care Act (“PPACA”) has focused upon the constitutionality of the so called “individual mandate,” this note explores an oft-overlooked portion of the PPACA: Accountable Care Organizations (“ACOs”). These organizations are authorized in the PPACA and allow health care providers to join together as a single legal entity in order to lower the cost of patient care and improve its quality for Medicare patients. They must meet quality benchmarks and control costs in order to be eligible for Medicare shared savings payments. Health care spending is projected to reach 30% of GDP within five years, a staggering number, and in the PPACA, Congress authorized ACOs in an effort to combat this growing problem. In late 2011, the Centers for Medicare and Medicaid Services published the final regulations for ACOs, with implementation to begin soon.
This note explores ACOs from a beneficiary choice perspective, identifying the serious problems that they pose for beneficiary independence in medical decisions. Strikingly, ACOs do not allow beneficiaries to “opt out” from participating, as the decision is entirely supplier-side. The regulations also require relatively ineffective disclosure regimes to beneficiaries as to what ACOs are. After analyzing the regulations, the note identifies the concrete harms to beneficiary health and overall spending that arise from decreased beneficiary independence. The note also compares the ACOs privacy and opt out provisions to similar federal programs and explores recent court decisions as to whether ACOs are legally required to make detailed disclosures to beneficiaries. Drawing upon legal scholarship, the note concludes by offering novel solutions to the problems in the law, such as an “opt in” method and extending incentives to save costs to the beneficiaries themselves. Overall, this note is timely and useful, as it follows a “middle road” approach, attempting to improve the experiences of Medicare patients while also further limiting the legal liability of ACO providers.
Keywords: Healthcare, Obamacare, Accountable Care Organizations, ACOs, Medicare
JEL Classification: K39
Suggested Citation: Suggested Citation
Lazerowitz, Evan, Accountable to Whom? How Accountable Care Organizations Jeopardize Medicare Beneficiaries’ Health Information and Choice (January 1, 2012). Available at SSRN: https://ssrn.com/abstract=2159501 or http://dx.doi.org/10.2139/ssrn.2159501