By REBECCA FOGG
Earlier this month, the Centers for Medicare and Medicaid Services Administrator Seema Verma proposed bold changes to Medicare’s Accountable Care Organizations (ACOs), with the goal of accelerating America’s progress toward a value-based healthcare system—that is, one in which providers are paid for the quality and cost-effectiveness of care delivered, rather than volume delivered.
CMS has created a number of ACO programs over the last six years in an effort to improve care quality and reduce care costs across its Fee-for-Service Medicare population. In a Medicare ACO, hospital systems, physician practices and other voluntarily band together and assume responsibility for the quality and cost of care for beneficiaries assigned to them by Medicare. All ACOs meeting quality targets at the end of a given year receive a share of any savings generated relative to a predetermined cost benchmark; and depending on the type of ACO, some incur a financial penalty if they exceed the benchmark.
According to CMS’ recent analyses, ACOs that take on higher financial risk are more successful in improving quality and reducing costs over time. So one important objective of CMS’ proposed changes is to increase the rate at which ACOs assume financial risk for their beneficiaries’ care.
By KIP SULLIVAN, JD
There is no meaningful difference between the performance of Medicare ACOs that accept only upside risk (the chance to make money) and ACOs that accept both up- and downside risk (the risk of losing money). But CMS’s administrator, Seema Verma, thinks otherwise. According to her, one-sided ACOs are raising Medicare’s costs while two-sided ACOs are saving “significant” amounts of money. She is so sure of this that she is altering the rules of the Medicare Shared Savings Program (MSSP). Currently only 18 percent of MSSP ACOs accept two-sided risk. That will change next year. According to a proposed rule CMS published on August 9, ACOs will have at most two years to participate in the MSSP exposed to upside risk only, and after that they must accept two-sided risk.
That same day, Verma published an essay on the Health Affairs blog in which she revealed, presumably unwittingly, how little evidence she has to support her decision. The data Verma published in that essay revealed that one-sided ACOs are raising Medicare’s costs by six-one-hundredths of a percent while two-sided ACOs are cutting Medicare’s costs by seven-tenths of a percent.  Because these figures do not consider the expenses ACOs incur, and because the algorithms CMS uses to assign patients to ACOs and to calculate ACO expenditure targets and actual performance are so complex, this microscopic difference is meaningless.
“Two beellion dawlers”
Even if the difference is not meaningless – even if two-sided ACOs actually save a few tenths of a percent for Medicare – the impact on Medicare spending will be barely noticeable. Verma assures us, without a hint of embarrassment, that her new rule will cut Medicare spending by $2.2 billion over ten years. “The projected impact of the proposal would be savings to Medicare of $2.2 billion over ten years,” she declares in her blog comment.
Dr. Evil from Austin Powers
I feel like we’re in a scene from the Austin Powers movie where Dr. Evil announces he will hold the world ransom for “one meellion dawlers.” Dr. Evil’s sidekick, Number Two, has to advise him that a million dollars is peanuts. Verma’s estimate of 2.2 “beellion dawlers” is essentially zero percent of the trillions of dollars CMS will spend on Medicare in the next decade.
The Administration proposal that would enable small employers to band together to purchase health insurance by forming Association Health Plans has several good features. Large companies do pay about 15% less, apples-to-apples, for health insurance than small businesses because they negotiate lower administrative fees, get larger discounts on health care prices and avoid premium taxes and risk charges by self-insuring. Allowing small business to replicate what boils down to volume discounts also appeals politically to many as a market-based alternative to government intervention. Reliance on Association Health Plans could result in substantial volume discounts, but, in the end, would be like paying $10 for a tube of toothpaste that retails for $100, a big discount and a rip-off price.
Even though the largest companies get very deep discounts, there is substantial research showing that their net costs are much higher than everywhere else because we in the United States pay higher prices for health care goods and services. One need to look no further than the benchmark large corporate purchasers who continue to pay about 40% or 50% more than Medicare for the same health care to see how excessive health care prices for private payers are. And this disparity is likely to get worse. While hospitals gobble up other hospitals and doctors’ practices and gain near monopoly market power to raise prices, employers of all sizes remain highly fragmented and, as a result, impotent price negotiators.
A better approach to health care cost containment than Association Health Plans hides in full view. Continue reading…
Our healthcare system is self-destructing, a fact made more obvious every single day. A few years ago, a number of brave physicians who were fed up with administrative burden, burnout, and obstacles to providing care for patients started a movement –known as Direct Primary Care (DPC.) This is an innovative practice model where the payment arrangement is directly between a patient and their physician, leaving third parties, such as insurance or government agencies, completely out of the equation.
The rapidly growing number of DPC physicians have organized into a group called the DPC Coalition (DPCC); suddenly, the Centers for Medicare and Medicaid (CMS) is paying attention. As of February 2018, there are 770 DPC practices across the United States with new clinics opening each week as brave physicians leave the “system” behind, never looking back. Breaking free from the chains of insurance and government, this group is restoring the practice of medicine to its core, a relationship between a physician and their patient.
CMS understands there is a problem with the way Medicare services are being delivered to tax payers; it turns out their idyllic version of “high quality” care is not as affordable as they predicted. All evidence indicates the DPC model is not only capable of generating significant cost reduction, but also saving the federal government billions if administered on a large-enough scale. As fewer physicians accept Medicare and convert to DPC practices, CMS wants a piece of the pie.
I attended a Population Health conference this summer where a number of representatives from large health systems and physician organizations convened to discuss common challenges. Many of my healthcare colleagues assume that anything that carries the label “Population Health” must relate to health disparities and food deserts. While we do address these topics, the vast majority of sessions and conversations had one underlying theme: lowering the total cost of care.
In rebuttal to any charges that our group is far too corporate to be considered a fair example of Population Health advocates, even the Institute for Healthcare Improvement addresses the importance of managing costs with the third part of the Triple Aim stated as “reducing the per capita cost of health care”.
Whether it is from Medicare or commercial ACOs, the Efficiency metric in CMS’s Value-Based Purchasing program, or the continued push from commercial payors for bundled payment programs, health systems and provider groups are beset by demands regarding cost. Unfortunately, at this conference, and in most groups trying to meet the demands of Population Health, one key stakeholder group is often absent: Specialists.
If cardiologists, spine surgeons, and hospitalists cannot become engaged with Population Health principles, moving the cost needle will be very challenging, if not impossible. I believe there are ways, however, to engage specialists in providing efficient care.
The toxic polarization of Washington politics might lead even the most stubborn optimist to abandon any hope for bipartisanship on healthcare. Despite endemic pessimism, the flagging efforts to forge a Republican consensus on “repeal and replace” might set the stage for overdue efforts at compromise. Congress will be tempted to move on to more promising areas such as tax reform and infrastructure funding. That temptation should be resisted. The threat to the nation posed by the current state of American healthcare calls for Congress to resurrect the long lost spirit of bold bipartisanship.
Before considering opportunities for compromise, the obstacles confronting the GOP reform efforts are worth considering. Republicans face the same stubborn reality that confronted the framers of the Affordable Care Act (ACA): Expensive services cannot be covered by cheap insurance. The cost of U.S. healthcare has simply priced low income and even middle income individuals out of health insurance. Without subsides, they get left behind. The Congressional Budget Office’s estimated that the Ryan plan would result in 24 million losing coverage underscored the political divide: Confronted with unmanageable healthcare costs, most Republicans would opt to reduce public expense whereas Democrats plus a handful of Republican moderates prefer more extensive coverage. The effort of the GOP leadership to split the difference by preserving some residual subsidies and the structures supporting them—“Obamacare light”—remains unacceptable to many on the right. No clear middle ground has yet emerged.
Today, we are finalizing policies to implement the new Medicare Quality Payment Program. Part of the bipartisan Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the Quality Payment Program aims to create a more modern, patient-centered Medicare program by promoting quality patient care while controlling escalating costs through the Merit-Based Incentive Payment System (MIPS) and incentive payments for Advanced Alternative Payment Models (Advanced APMs).
After issuing our proposal for how to implement the new program earlier this spring, we held a listening tour across the country to hear your thoughts and concerns first-hand about the Quality Payment Program. Whether you formally submitted one of the over 4,000 comments we received, or were one of the nearly 100,000 attendees at our outreach sessions, there have been record levels of clinician engagement. The interactions reflect the importance you place on serving the more than 55 million individuals that have Medicare coverage.
We found an eagerness to help the Medicare program improve and an interest in being engaged in how we address the challenges and opportunities ahead. We also heard concerns, which is not surprising, given the challenge of changing something as large and important as the Medicare program. But, we found that there is near-universal support for moving towards a future focused on patient care that pays for what works, reduces clinician burden, and better supports and engages the medical community.
Recently, Anish Koka, MD, a Cardiologist from Pennsylvania, posted his anti-Accountable Care Organization (ACO) manifesto here on The Health Care Blog.  Koka argues that ACOs don’t work and are doomed to fail because they were designed by non-practicing physician policymakers and academics in ivory towers. He appears to be basing his judgment on a commercial ACO contract that only pays him $4 per month extra for care coordination and requires that he meet specific quality measures. He is also conflating his experience in a commercial ACO with Medicare ACOs, and interprets the initial results of one Medicare ACO program to mean that all ACOs are a failure. Finally, he relays an anecdote of caring for one of his patients, Mrs. K, a patient with chronic illness who doesn’t want to take her medication.
In his post, Dr. Koka calls out “well-meaning, hard-working folks that own a Harvard Crimson sweater…[whose] intent is to fundamentally change how health care is provided.” As luck would have it, I do own a Harvard Crimson sweater, and I’d like to respond.
It is possible that in a few months from now, only Nate Silver’s prediction models will stand between Donald Trump and the White House. I will leave it to future anthropologists to write about the significance of that moment. For now, the question “What will President Trump be doing when he is not building a wall?” has assumed salience.
This is relatively easy to answer when it comes to health policy. Just ask what people want. Seniors don’t want Medicare rescinded. Even the free market fundamentalist group, the Tea Party, wants Medicare benefits as they stand. At one of their demonstrations against Obamacare a protester warned, without leaving a trace of irony, “Government, hands off my Medicare.”
Rest assured, Trump will protect Medicare. Even raising the eligibility age for Medicare may be off the cards as far as he is concerned. He has promised that no one will be left dying on the streets. That people no longer die on the streets, but in hospitals, because emergency rooms must treat patients regardless of their ability to pay, is irrelevant. The point is that Mr. Trump knows that the public values their healthcare. Trumpcare will show that Trump cares.
It’s done. Congress on April 14 passed and the president signed into law a bill that terminates one of the most egregious and silliest examples of dysfunctional government in recent years—the so-called “sustainable growth rate” (SGR) formula for doctors’ fees under Medicare.
A previous blog explained the background and protracted lead-up to this moment.
First, a round of applause for bipartisan agreement—however obvious it was that had to happen in this case. The vote in the house was 392-37. In the Senate, it was 92-8.
Praise is also in order for enacting two more years of funding for the Children’s Health Insurance Program and $7.2 billion in new funding over two years for community health centers, a program that was expanded under the Affordable Care Act and serves low-income families. There’s also welcome help for low-income Medicare beneficiaries and rural hospitals.
But the main thrust of the law is to kill one (failed) program that adjusted doctors’ fees under Medicare and create a new and hopefully better one.