By KIP SULLIVAN

In my last post , I made fun of Ezekiel Emanuel and Joseph Liebman for predicting that ACOs would replace insurance companies by 2020. I noted that the 800 to 1,000 ACOs reportedly in existence today are nowhere near ready to accept full insurance risk because they have shown no ability to cut costs. [1]

Although Emanuel and Liebman were foolish to predict most ACOs would quickly evolve into successful insurance companies, they shared with all other ACO advocates the understanding that that’s what ACOs are supposed to do – over time they’re supposed to bear more and more financial risk. It’s just never been clear how much financial risk ACOs were supposed to take on. The Affordable Care Act, for example, which authorized CMS to establish an ACO program within Medicare, did not address that question.

A reasonable interpretation of statements and papers by ACO proponents is that they expected a substantial portion of ACOs to morph into insurance companies. According to an early paper  by several prominent ACO proponents, including Elliott Fisher, ACOs were expected to accept more risk in three stages: In stage 1 they would accept only upside risk (the opportunity to share in savings if they stayed under a target spending level); in stage 2 they would accept both up- and downside risk; and in stage 3 they would accept full insurance risk (they would no longer be paid fee-for-service, but would instead be paid “capitation” payments, aka premium payments), and would, therefore, have to set aside reserves. Presumably stage 3 ACOs would also have to be licensed by the insurance regulators in the states where they operate.Continue reading…

By NIRAN AL-AGBA, MD

A National School Walkout Day is planned for March 14, 2018 at 10 a.m. and will last 17 minutes in honor of the 17 students and staff members killed at Marjory Stoneman Douglas High School in Parkland, Florida, on Valentine’s Day. The heart of the nation has seemed to shift overnight regarding the debate on guns, but this change has been almost two decades in the making. United and Delta Airlines pulled their support for the NRA, Dicks’ Sporting Goods will not sell assault-style weapons, and Walmart plans to raise the minimum age to purchase a gun to 21 years old.

I am a pediatrician. I treated the Columbine kids.

I have sat on the sidelines for far too long. I watched from a front row seat as frightened, grieving children who survived the shooting at Columbine High School on April 20, 1999 struggled to put their lives back together.  My pediatric internship began June 23, 1999, at the Children’s Hospital in Denver, Colorado, approximately 20 miles north of Columbine High School. Up until that time, a mass shooting inside the walls of a high school had been almost unimaginable. Many students who had survived by hiding under a desk in the library that tragic day crossed my path over the next three years.

As a physician I am bound by strict patient confidentiality laws. For that reason and out of respect for the survivors, I cannot tell you their names. I cannot tell you the stories they told me. Or the awful things I read in their charts. I will let your imagination fill in the blanks.

I can only leave you to guess at what they saw and the nightmares that haunted them. In reality, every student and teacher inside Columbine High School was irreparably damaged forever; they lost a huge part of themselves on that heartbreaking day.

Why has so little changed in almost 20 years since Columbine?

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By RYAN MARLING

Amazon has chosen its initial partners for its foray into healthcare—Berkshire Hathaway, the third largest public company in the world, and JPMorgan Chase, one of the largest banks in the world. Their mission is ambitious: to check the rise in health costs while concurrently enhancing patient satisfaction and outcomes. Can these three companies, none of which have expertise in healthcare, truly make a dent in healthcare costs? I would argue yes.

Here are three reasons why this partnership is fertile ground to realign innovation efforts with affordability and a long-term focus on health:

Self-insured employers play by different rules

The partnership’s first priority, as JPMorgan Chairman and CEO Jamie Dimon has stated, is to “create solutions that benefit our U.S. employees, their families, and potentially, all Americans.” Many have speculated this equates to covering their employees in a self-insured manner first. If this happens to be the case, the partnership will be constructing its model within a market that is conducive to minimizing costs.

In the private insurance market, private insurance companies are disincentivized to encourage innovation that lowers care costs, in part due to the Medical Loss Ratio. The Medical Loss Ratio is the ratio of expenditures in medical claims paid by an insurer for care of their beneficiaries to premium revenue. Private insurance companies are required to keep their MLR above 80% in the small group market and 85% in the large group market. Though the Medical Loss Ratio intends to ensure care is not withheld from beneficiaries, it also changes the profit maximization strategy for private insurers.

Instead of improving their bottom line with preventive care and finding ways to lower care costs, these private insurers profit when the 15 to 20% of premium revenues not seen as “medical loss” (such as overhead, administrative costs, and profit) is as large as possible. In order to maximize profit, the total revenue collected in premiums must also be as large as possible—pushing insurers to not only cover as many lives as possible, but raise premiums. Such a market discourages innovation meant to control care costs, as any successful initiatives would only end up diminishing the potential for profit.

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By SEEMA VERMA

Following is the full text of CMS administrator Seema Verma’s remarks at HIMSS18 in Las Vegas.

It is a privilege to be with you here today and speak about the amazing advancements happening all across the nation in healthcare. One of the most exciting parts about being the CMS Administrator is the opportunity to see the cutting-edge breakthroughs that are happening every day. As we walk the exhibit hall of this conference, it is easy to be struck by how innovation is accelerating in healthcare.

We have procedures that we couldn’t have imagined a generation ago that are saving thousands of lives.

• Precision medicine has opened the door to a new world of therapies specifically tailored to a patient’s unique genetic code.
• We can now treat retinal disease that causes blindness.
• Robotic technology is making surgeries less invasive, and we are on the verge of having the world’s first artificial pancreas.
• 3D training tools are enabling doctors to learn anatomy without a cadaver.
• Telemedicine is also improving access to care and empowering CMS beneficiaries to lead healthier lives.

And it doesn’t stop with traditional healthcare innovators. The automobile industry is partnering with leading technology companies to perfect driverless cars that may one day give independence to our nation’s elderly and people with disabilities. And through smart phones and wear-able technology, we are compiling health information every second, and Americans are using that information to track activity, calories, and heart rates. Innovators are even developing ways to monitor chronic illness with electronic watches. The list of innovation is endless.

But while all of this technology is changing every area of our lives, we face enormous challenges in healthcare, and the value that we are receiving for the amount of money that is being spent.

Last year CMS released a report showing that the rate of growth in healthcare spending is not slowing down. Despite all of the changes and regulations over the past decade, healthcare continues to grow more quickly than the overall economy. By 2026, we will be spending one in every five dollars on healthcare.

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