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Is the ACO DOA? Reasonable Minds Can Improve the Draft Regulations

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By DAVID HARLOW

In the current all-ACO, all the time, health care policy news cycle, we’ve been inundated with declarations that the ACO is dead, because a handful of big boys say they don’t want to play.

Today, CMS announced that it is tinkering with the proposed ACO rules by offering three variations on the ACO theme (link to press release; see also CMS ACO fact sheet).  From the fact sheet:

  • Pioneer ACO Model: The Innovation Center is now accepting applications for the Pioneer ACO Model, which will provide a faster path for mature ACOs that have already begun coordinating care for patients.  The Pioneer ACO model is estimated to save Medicare as much as $430 million over three years by better managing care for beneficiaries and eliminating duplication.  And it is designed to work in coordination with private payers in order to achieve cost savings and improve quality across the ACO, thus improving health outcomes and reducing costs for employers and patients with private insurance.
  • Advance Payment ACO Initiative: The Innovation Center is seeking public comments on whether it should offer an Advance Payment Initiative that would allow certain ACOs participating in the Medicare Shared Savings Program access to a portion of their shared savings up front, helping providers make the infrastructure and staff investments crucial to successful ACOs.  Comments should be submitted by June 17th, 2011.
  • Accelerated Development Learning Sessions: Providers interested in learning more about the steps necessary to become an ACO can attend an upcoming series of Accelerated Development Learning Sessions.  These convenient and free sessions will help providers learn what steps they can take to improve care delivery and how to develop an action plan for moving toward better-coordinated care.

Together with the Medicare Shared Savings Program, the initiatives announced today give providers a broad range of options and support that reflect the varying needs of providers in embarking on delivery system reforms.

CMS has recently hinted that it will be rejiggering the rules to encourage physician-led ACOs, too (an approach I have previously endorsed).Continue reading…

Single Payer in Vermont? Well, Not Exactly

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By ROGER COLLIER

In just a few days, Vermont’s Governor Peter Shumlin will sign into law what the media is calling “single payer health care reform.” But is it?

Vermont has certainly demonstrated more enthusiasm for a single payer approach than any other state. The Governor and key Democratic legislators have supported the concept, the state has a well-organized lobbying group in Vermont for Single Payer, and a state-funded study earlier this year estimated that a single payer approach could dramatically reduce health care costs. The major result has been passage in the past month by both of the state’s legislative chambers of the bill that Governor Shumlin indicates that he will sign.

So does this mean that Vermont is ready to upend its existing health care financing system and replace it with a French or British-style system? Not exactly.

The versions of the bill passed by Vermont’s House and Senate are each far, far more tentative than committed single payer advocates would wish, and have already been subject to scathing criticism by national single payer advocates. The bill provides for the creation of the legal framework of a public insurance program, to be called Green Mountain Care, but includes no funding mechanism, defines no benefit standards, is vague on the future roles of private insurers, and is silent on exactly how existing federal programs are to be incorporated.

What the bill does do is to establish the state exchange required by the Accountable Care Act, encourage experimental capitated payment structures, and create a Board for Green Mountain Care with responsibility for examining funding, benefit, and other issues, with recommendations to be submitted to the state legislature in 2013.Continue reading…

A New Norm for Hospital Operations

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By CHARLIE EVANS

Since the passage of the Patient Protection and Affordable Care Act (PPACA), I have had the opportunity to engage a wide variety of colleagues, policymakers, and noted health care thinkers about the effects of health care reform on hospitals.  With the hindsight of over 30 years managing hospital operations, I have developed the strong belief that if hospitals are to improve significantly the systemic delivery of care we must commit to making bigger changes than may seem reasonable.  Moreover, hospital administrators entering the field will do well to consider changes of this scale as the “new norm” that will likely govern the industry for the next several decades.

Proposed reforms, like Medical Homes, Accountable Care Organizations and bundled payments, have consumed much of the focus since passage of PPACA, yet they will not be enough to achieve the national goal of high quality, low cost care.  Many progressive organizations have been successfully utilizing variations of this payment methodology and these delivery systems for extended periods of time, but there is little evidence that national adoption of these delivery systems alone will produce the results the country needs.  To have a substantial impact on slowing the growth of care delivery costs we must make a giant leap forward in everything from design of facilities to the processes that govern care delivery to how we utilize information technology.

With more than 5,000 hospitals operating in the country, the thought of altering the fundamental operating design of hospitals may seem to be unreasonable.  However, if we are to design a health system for the 21st century then let’s begin from the ground up.  The industries that produce the best quality products most efficiently today do not use production facilities designed and built 30-50 years ago.  They have recognized the need to streamline facilities so that products move through the operational cycle more quickly; sub processes efficiently contribute to the overall system aim; and information technology delivers a snapshot of any component of the business on demand and in real-time.

Can our most modern hospitals do that? Overwhelmingly the answer is no.  Those who say that we are diagnosing and treating people, not creating widgets, miss the essential truth that if we decrease the waste and inefficiency in hospitals, we can free doctors and clinicians from unnecessary tasks and give them more time to spend with patients. By embodying proven efficiency practices already established in other commercial sectors, within the clinical processes currently employed in hospitals, we can establish a foundation for total hospital efficiency that will significantly benefit patients and lowers costs.

Continue reading…

Newt And The Health Wonks: A Tale of Lust And Power

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By MICHAEL MILLENSON

When former House Speaker Newt Gingrich announced his bid for the GOP presidential nomination, I found myself singing a few bars from Night Moves, Bob Seger’s hard-driving tribute to teenage hormones: “I used her, she used me/But neither one cared./We were gettin’ our share.”

No, this isn’t one more commentary on the Georgia Republican’s checkered marital past. I’m referring to a different relationship, the one between Gingrich and the health policy community. A critical component of the climb back to prominence for a man who inspired nearly as much distrust in his own party as in the opposition was proving he could work harmoniously with those holding differing views on an important policy issue — how to reform U.S. health care.

Gingrich succeeded so well that some of the policy recommendations he was touting just a few years ago bear a close resemblance to Obama administration actions that Gingrich now denounces as leading us to “a centralized health care dictatorship.”

The romance between Gingrich and the health wonks, and Gingrich’s makeover as a leader with ideas as much substantive as political, began after the appearance of his 2003 book, Saving Lives & Saving Money. The book gave credibility and visibility to a set of ideas being talked about in the health policy world about using information technology to improve medical care.Continue reading…

Musings on PHRs & Consumer Engagement

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By JOHN MOORE

The recent post on Google Health going into the deep freeze has solicited a number of emails, including some from the press. In one of those emails a reporter had spoken to several industry thought leaders to garner their opinions which follow:

Consumers will not sign on to most Personal Health Platforms (PHPs) or services due to the issue of trust.
– Leading researcher and developer of an open PHP.

Provider sponsored PHPs and patient portals will dominate the market for they offer services that patients/consumers want such as appointment scheduling, prescription refill requests, etc.
– Leading CIO who is also actively involved in HIT policy development.

The only people who care about a PHP, PHR, whatever you wish to call it are those who are struggling with a life-changing illness.
– Co-founder of leading site for those with serious illness to gather and share experiences.

Chilmark’s thesis is an amalgamation of the last two statements (we’ll get to the first one shortly).

By and large, people do not care about their healthcare until they have to, either for themselves or a loved one. Even then, if they are very sick, it may be far more than they are capable of to set-up and maintain a PHP. These systems are still far too hard to create and manage, let alone trying to get doctors and hospitals to feed complete records and updates into them in some automated fashion. There may be an opportunity in providing a system for baby boomers to help manage their aging parents health issues from afar. We have yet to find a PHP, PHR, whatever you wish to call it that ideally fits this market need and may be an opportunity for an enterprising entrepreneur.Continue reading…

The Last Best Hope

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By MARGALIT GUR-ARIE

According to the recently published CMS Accountable Care Organization (ACO) rules, an ACO needs to care for at least 5000 Medicare beneficiaries. Theoretically, two primary care physicians and a nurse, practicing in a garage, or cottage, in Boonville Missouri (yes, there is such a place), seeing nothing but Medicare folks, could become an ACO. Of course, they would have to set up a business entity with a board of directors, hire a couple of lawyers, several accountants and contract with a hospital or two and a score of specialists, and be ready to accept financial risk for their patients in a couple of years; all this on top of seeing twenty to thirty elderly and complex patients every single day. Nope. Not going to happen.

ACOs are for the big boys, hospitals and/or extra-large multi-specialty groups, to set up, manage and perhaps eventually benefit from. Big systems, as we all know, enjoy economies of scale, are better able to manage and coordinate care, and are therefore uniquely equipped to solve our health care crisis by providing better care at lower costs, and ACOs are just the vehicle by which these systems will be rewarded for all that good work. If you care for people in a small primary care practice, you could bite the bullet and sell out to a large system, or you could retire if you are one of those last standing dinosaurs, or you could become a concierge practice, or you could sit still and watch your practice dwindle and die, or you could buy an EHR, which is the last best hope to keep primary care independent.

Science, the type of science that employs mathematical hypotheses, theorems, proofs and equations, is timidly asserting that the emperor is in need of some serious clothing. A 2009 paper published in a non-medical, non-health care venue, “examines the staffing, division of labor, and resulting profitability of primary care physician practices”. The authors who are researchers from the University of Rochester and Vanderbilt University conclude that “many physicians are gaining little financial benefit from delegating work to support staff. This suggests that small practices with few staff may be viable alternatives to traditional practice designs.” Although I did not check the math, which is extensive, I would have expected that such controversial conclusion would make headline news in health care policy forums for at least two or three days. It did not.Continue reading…

The Hospitalist Field Turns 15: What The Past Says About The Future

By BOB WACHTER, MD

I just returned from the Society of Hospital Medicine’s annual meeting in Dallas. Seeing more than 2,000 hospitalists in one place is remarkable, since I remember the days when we all fit into a mid-sized conference room at a Holiday Inn.

I have clearly assumed the mantle of elder statesman at these meetings. I find this odd, since my idea of an elder statesman is UCSF’s former chair of medicine, Lloyd Hollingsworth (“Holly”) Smith, a man of unbelievable accomplishment and grace. Holly is now in his late 80s, and every year we ask him to say a few words at our department’s annual faculty dinner. Holly is the best after-dinner speaker I know – his comments, always insightful and hilarious, are increasingly peppered with “old guy” references (my recent favorite: “I’ve now reached the age of – when I reach down to tie my shoes, I ask myself, ‘Is there anything else I need to do as long as I’m down here?’ before I get up.”)

I’m not complaining: for the past decade, I’ve had the honor of giving a closing keynote address at the annual hospital medicine meeting. In this week’s talk, I reflected on the history of the hospitalist field, in the 15 years since Lee Goldman and I coined the term in the New England Journal of Medicine.

This kind of reflection is useful because, in a world in which we’re all drinking out of a huge information hose, it’s easy to focus on the short term and lose track of the arc of history. Self-help guru Tony Robbins had it right when he said, “Most people overestimate what they can do in a year, and underestimate what they can do in a decade.” Our 15-year history proves that.Continue reading…

Does Mitt Romney Deserve the Abuse He’s Getting on Health Care? Yes, He Does.

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By DAVID E. WILLIAMS

Mitt Romney took a big beating on the Wall Street Journal‘s editorial page last week, the same day he laid out his health care plan in the USA Today and defended his position on the topic in a speech in Michigan. I’m not a big Romney fan but had been feeling sympathetic enough toward him on this issue to defend him. After reading what he has to say, though, I’m not prepared to offer a defense. On the other hand, Massachusetts health reform remains defensible, if incomplete.

Here’s what Mitt Romney should have said:

  • Health reform in Massachusetts has achieved its main goal: more than 98% of residents now have health insurance including 99.8% of children
  • The Massachusetts reform was achieved by bringing together all major stakeholders in the state from both parties, and focusing on addressing a serious problem rather than scoring political points against one another at the expense of the public good
  • Gaining consensus enabled health reform not just to get passed, but actually implemented more or less as envisioned, in contrast to earlier failed attempts at universal coverage
  • Massachusetts’ long history of substantial public sector investments made this kind of reform feasible. Good schools translate into an educated workforce that attracts high-wage employers who can afford to offer health insurance. That made it possible for the state to offer a safety net that was more generous than other states’ (e.g., in its eligibility criteria for Medicaid) even before the enactment of so-called Romney Care
  • Massachusetts, like other states, still has a cost problem. It’s no surprise that Massachusetts health reform didn’t bring costs down. First, that wasn’t its goal. Second, cost problems can’t be addressed in a serious manner without changes in the health care delivery system and reform of Medicare. Tackling the delivery system is very difficult, and states have no power to reform Medicare. That’s why health reform can’t be left purely to the states; it has to be tackled at the national level
  • Even a cold-blooded capitalist like me realizes that pure free-market approaches aren’t effective or fair in health careContinue reading…

Wellpoint gets aggressive on inpatient payment changes

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We’ve heard a lot of whining over the years from private insurers about how they have to pay more because Medicare pays less. But now Wellpoint is going to essentially use the ACA as cover to put all of its hospitals on a pay for performance plan–obviously related to the ACO ideas we’re hearing from CMS. The WSJ reports that all hospitals in Wellpoint’s networks are going to be paid future increases based on a formula for outcomes, patient safety and patient satisfaction. Thus far private insurers have been laggards in that they haven’t really mixed up payment schemes to incent better behavior by providers–even though nothing was stopping them. They always claimed they would eventually. Maybe eventually is now.

How Should Medicare Pay for Medical Care?

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By JOHN GOODMAN

There are basically five possibilities. To compare them, let:

S = each unit of service, or a package of services

P = the price of each unit of service, or the price of a package of services

Then the government can:

1.     Dictate every service it will pay for and the price it will pay for each of them (fix S and P), leaving providers to compete only on amenities, including waiting times.

2.     Dictate S, but leave providers free to compete on P, say, through a system of competitive bidding.

3.     Dictate P, but leave providers free to compete on what S they will provide for that price.

4.     Initially fix S and P, but leave providers free to opt out, substituting different bundles of S & P as long as government’s cost goes down and quality of care goes up.

5.     Initially fix S and P, but allow patients to opt out, managing a portion of the funds directly and making their own purchasing decisions.

Alert readers will recognize (4) and (5) as NCPA solutions, (3) as the Rivlin-Ryan plan, and (1) as the status quo. But I’m getting ahead of the story.

Under the current system (Method 1), Medicare establishes a list of about 7,500 physician tasks it will pay, and sets the price for each of them. These prices differ, however, for every city, town, and hamlet in the land. So that in fact there are millions of prices that Medicare is administering every day.

One important drawback of this system is that it’s in no one’s interest to curtail spending. Every provider maximizes profit and every patient maximizes utility by exploiting the reimbursement formulas.

Continue reading…

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