This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Medicare Patient Empowerment Act
American Medical Association
Rep. Tom Price, MD (R-GA) introduced H.R. 1700, the Medicare Patient Empowerment Act, on May 3, 2011. This bill, in line with AMA policy, would allow Medicare patients and their physicians to enter into private contracts without penalty to either party. It would enable beneficiaries to use their Medicare benefits to see physicians who do not accept Medicare, as opposed to paying for the entire cost of their care out-of-pocket as required under current law. On May 22, Sen. Lisa Murkowski (R-AK) introduced S. 1042, the Medicare Patient Empowerment Act, in the Senate.
AMA letters expressing “strong support for this legislation”:
To Sen. Lisa Murkowski:
Medical organizations supporting this legislation:
Existing law (excerpts):
Use of Private Contracts by Medicare Beneficiaries.—
(1) In general.—Subject to the provisions of this subsection, nothing in this title shall prohibit a physician or practitioner from entering into a private contract with a medicare beneficiary for any item or service—
A) for which no claim for payment is to be submitted under this title, and
(B) for which the physician or practitioner receives—
(i) no reimbursement under this title directly or on a capitated basis, and
(ii) receives no amount for such item or service from an organization which receives reimbursement for such item or service under this title directly or on a capitated basis.
(B) Items required to be included in contract.—Any contract to provide items and services to which paragraph (1) applies shall clearly indicate to the medicare beneficiary that by signing such contract the beneficiary—
(i) agrees not to submit a claim (or to request that the physician or practitioner submit a claim) under this title for such items or services even if such items or services are otherwise covered by this title;
(ii) agrees to be responsible, whether through insurance or otherwise, for payment of such items or services and understands that no reimbursement will be provided under this title for such items or services;
(iii) acknowledges that no limits under this title (including the limits under section 1848(g)) apply to amounts that may be charged for such items or services;
(iv) acknowledges that Medigap plans under section 1882do not, and other supplemental insurance plans may elect not to, make payments for such items and services because payment is not made under this title; and
(v) acknowledges that the medicare beneficiary has the right to have such items or services provided by other physicians or practitioners for whom payment would be made under this title.
(ii) the affidavit provides that the physician or practitioner will not submit any claim under this title for any item or service provided to any medicare beneficiary (and will not receive any reimbursement or amount described in paragraph (1)(B) for any such item or service) during the 2–year period beginning on the date the affidavit is signed
H.R. 1700 and S. 1042 (excerpts):
Section 1802 of the Social Security Act is amended to read as follows:
(b) Freedom To Contract by Medicare Beneficiaries-
`(1) IN GENERAL- Subject to the provisions of this subsection, nothing in this title shall prohibit a Medicare beneficiary from entering into a contract with a participating or non-participating physician or practitioner for any item or service covered under this title.
(B) ITEMS REQUIRED TO BE INCLUDED IN CONTRACT- Any contract to provide items and services to which paragraph (1) applies shall clearly indicate to the Medicare beneficiary that by signing such contract the beneficiary–
`(i) agrees to be responsible for payment to such physician or practitioner for such items or services under the terms of and amounts established under the contract;
`(ii) agrees to be responsible for submitting claims under this title to the Secretary, and to any other supplemental insurance plan that may provide supplemental insurance, for such items or services furnished under the contract if such items or services are covered by this title, unless otherwise provided in the contract under subparagraph (C)(i); and
`(iii) acknowledges that no limits or other payment incentives that may otherwise apply under this title (such as the limits under subsection (g) of section 1848 or incentives under subsection (a)(5), (m), (q), and (p) of such section) shall apply to amounts that may be charged, or paid to a beneficiary for, such items or services.
SEC. 3. PREEMPTION OF STATE LAWS LIMITING CHARGES FOR PHYSICIAN AND PRACTITIONER SERVICES.
(a) In General- No State may impose a limit on the amount of charges for services, furnished by a physician or practitioner, for which payment is made under section 1848 of the Social Security Act (42 U.S.C. 1395w-4), and any such limit is hereby preempted.
http://thomas.loc.gov (enter either H.R.1700 or S.1042)
Sadly, the American Medical Association is showing once again whom they really represent – physicians, but not their patients. This legislation would greatly enhance physician revenues at a considerable cost to their Medicare patients. It would allow physicians to require their patients to pay the full balance of their unrestricted fees, even if far in excess of Medicare allowable charges.
Current law prohibits physicians from billing the patient for any charges other than deductibles and coinsurance that are applied to allowable charges only. All fees beyond the allowable amount must be adjusted off. The only exception is that a physician may enter into a private contract with a patient who agrees to pay the full amount, but only if the physician and patient agree to not bill Medicare for even the allowed charges, and the physician agrees to not bill Medicare for any other patient for a minimum of two years.
Even though we often hear threats that physicians will stop seeing Medicare patients, most really can’t afford to give up their Medicare revenues, and, besides, too many Medicare beneficiaries do not have adequate resources to pay large medical bills in full. The current law provides leverage to ensure that physicians will be there when Medicare patients need them.
The Price/Murkowski legislation would no longer require physicians to exit the Medicare program entirely should they enter agreements to independently bill the patients for the balance of their fees. Also Medicare would still have to pay the allowed charges. As a further insult, the physician can require the patient to do their own Medicare billing. The physician gets the full fee, in cash, including the disallowed charges, and the patient has to do the paperwork. Nice guys, AMA!
If physicians were allowed to bill for the balance of the charges, Medicare as we know it would be destroyed. It is a more direct and more powerful method of shifting payment from the government to individual patients – far worse than the cost shift that would occur with the Ryan premium support proposal for Medicare. Since the greatest contributor to our excessive health care spending is our high prices, the Price/Murkowski legislation would cause health care spending to skyrocket because there would be no limits on physician pricing.
If you check the list of endorsing medical organizations at the link above, it is an embarrassment to those of us who have always thought that the patient comes first, but there is one consolation. Conspicuously absent from the list are the American Academy of Family Physicians and the American College of Physicians. Thankfully, our nation’s primary care physicians still believe that our patients really do come first.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
A recent Quote of the Day (May 19) discussed Intermountain Healthcare as an example of how an integrated health care system can help to control costs by emphasizing quality improvement. A co-author of the Health Affairs article cited, Dr. Brent C. James of Intermountain Healthcare, has discussed this topic with Dr. Joe Jarvis of the Utah Healthcare Initiative. Although their views on single payer differ, their discussion is a welcome addition to this dialogue.
Utah Health Care Initiative
IHC: A Quality Story
By Dr. Joe Jarvis
May 21, 2011
Dr. Brent James Responds
By Dr. Joe Jarvis
May 23, 2011
Brent James: Senate Testimony on quality
April 29, 2009
Although Brent James has demonstrated that quality is attainable independently of the financing system for health care, his approach requires a degree of altruism which he posses but which has not permeated the entire health care delivery system.
Quality and financing are two different considerations, but there is a tremendous amount of overlap. A well designed single payer system provides tools and incentives for quality enhancement, just as a high quality system provides efficiencies for the financing system.
Dialogues such as this between Dr. Jarvis and Dr. James move the process forward bringing us closer to the day that we can experience a high quality health care system for all that is truly affordable – a financing system that is universal and equitable, and a high quality delivery system that makes it work.
PNHP National Coordinator Dr. Quentin Young sent the following letter to Rep. Paul Ryan (R-Wisc.) earlier today.
Representative Paul Ryan
1233 Longworth HOB
Washington, D.C. 20515
May 25, 2011
Dear Rep. Paul Ryan,
Our organization, Physicians for a National Health Program, is strongly supportive of Medicare, recognizing it as one of the premier legislative achievements in the history of the United States. Therefore, I am writing to express our gratitude for your role in eliciting the overwhelming support that the people of our country extend to this important social justice program.
Since you succeeded in securing virtual unanimous support from the Republican majority in the House of Representatives for your voucher program, the rejection of your plan has been demonstrated nationwide. The spectacular defeat of Ms. Corwin in the 26th district of New York on May 24, 2011, is clearly the earliest expression of the vital importance our nation attaches to a single-payer comprehensive health plan for the elderly, Medicare.
I can think of no other political act that could match your voucher program “reform” in mobilizing public support for Medicare going forward. The collateral damage to the Republican aspirations for power is immeasurable.
Thank you very much,
Quentin Young, M.D., M.A.C.P
Physicians for a National Health Program
cc: President Barack Obama
Speaker John Boehner
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
GOP Pushes To Let States Reduce Medicaid Rolls
By Mary Agnes Carey and Phil Galewitz
Kaiser Health News, May 23, 2011
Medicaid covers about 56 million Americans, with states sharing the costs with the federal government. States have been barred from cutting eligibility for the program since 2009 when economic stimulus legislation gave states billions to prop up their Medicaid program on the condition they didn’t tighten eligibility standards. The 2010 health law extended this requirement until 2014.
President Obama and congressional Democrats say eliminating the “maintenance-of-effort” provision would increase the challenge of expanding Medicaid in 2014; an additional 16 million people will qualify, with the federal government picking up most of the cost.
The House Energy and Commerce Health Subcommittee voted along party lines earlier this month to repeal the Medicaid “maintenance of effort” requirement. The legislation is expected to pass both the full Energy and Commerce panel and the GOP-controlled House. A vote on similar standalone legislation in the Democratic-controlled Senate is unlikely but the measure could end up in a debt-limit package.
But liberals have at times been disappointed by Obama’s concessions, including last year’s deal to extend the Bush-era tax cuts. They worry that the president will ultimately feel compelled to trade away the “maintenance-of-effort” requirements. The White House declined to comment.
As has been said many times in these messages, Medicaid is a welfare program, and our politicians will continue to approach it as such. It will remain underfunded and will always be vulnerable to budgetary decisions. Not only did the Affordable Care Act greatly expand coverage with the highly flawed private insurance plans, it also greatly expanded the highly flawed Medicaid program. It’s still not too late to eliminate these unsatisfactory programs and replace them with an improved Medicare that covers everyone.
US Healthcare Costs Continue to Rise, But At Declining Rates According to the S&P Healthcare Economic Indices
May 19, 2011
David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s:
“If you look over the last year or so of data, it is apparent that the rates of increase in health care costs continue to slow down. While there was some volatility within months, the general trend has been a slowdown across all nine of the indices we publish. Most of the annual growth rates peaked in the late winter/early spring of 2010. Since then, most of these rates have fallen by 2 percentage points or more. The biggest slowdown has come from the Hospital Medicare Index, where the annual growth rate fell from +8.30% in August 2009 to +1.18% in March 2011. On the other hand, we have not seen an equal trend for the Hospital Commercial Index, where the annual growth rate peaked at +9.36% in May 2010, and is still reporting a healthy +8.36% as of March 2011. This phenomenon could be the possible result of two things: (1) costs for Medicare patients are being better contained than those covered under commercial insurance plans and (2) hospitals are using more procedures and services covered under commercial plans, contributing to the increase in total costs. We see a similar differential across the Professional Services Indices, but not as severe.”
For the past several years, the trend of medical costs funded by commercial insurance plans is significantly greater than those funded by Medicare.
Click on this link for two graphs dramatically demonstrating these differences:
We frequently see reports that attempt to explain away the findings that medical costs funded by private commercial insurance plans are significantly greater than those funded by Medicare. This report from Standard and Poor’s leaves absolutely no doubt that the difference is not only real, but it is very significant.
Just to show how different the people on Wall Street think, the Hospital Commercial Index is reported as “a healthy +8.36% as of March 2011.” Leave it to Wall Street gurus to declare that extremely high private sector (commercially insured) health care cost increases are “healthy.” You would think that businesses paying commercial rates rather than Medicare rates would take notice.
Professor Donald Light responds to yesterday’s message on Intermountain Healthcare’s success in improving quality while reducing costs (http://www.pnhp.org/news/2011/may/achieving-aco-goals-without-the-aco):
Thanks for sending out your excellent synopsis of the new article about how Intermountain Healthcare has saved money while maintaining high quality. As an adviser to the NHS since 1991 who has published critical policy analyses in the BMJ since then of its pro-competition reforms to create a market internal to its single-payer frame, I took advantage of your free link and read the article. Let me share some thoughts with you and colleagues.
From the first page, it becomes clear that Intermountain is much more like a single-payer health care system than the NHS, back to at least 1986, because of its integrated and constantly improved data systems measuring costs and clinical processes that form the basis for all of its achievements. I pointed out in 1991 that it was folly for Mrs. Thatcher to allow competing hospitals to choose what they measured and how, and in 1997 I recommended to new leaders at Richmond House who were keen on integrated data that they adapt one of two fully developed integrated data systems available free on the web, one from the VHA (Veterans Health Administration) and the other from Finland. No interest was shown, and the NHS continued to pour large sums each year into contracting with international companies to develop a fresh integrated data system. Fourteen years later none yet exists, and observers have wondered if this is a boondoggle from the government to those corporations? Intended or not, that has been the result.
Intermountain’s account also exhibits, as does the case of the VHA, strong, consistent leadership over many years dedicated to improving quality and reducing costs. NHS results have been mixed, with some achievements of improved quality but not as part of a “single-payer,” integrated plan to hold down costs while improving quality by reducing large clinical variations. Most important, Intermountain treats its hospital services as integrated with all services outside hospitals, as does the reformed VHA, Kaiser, Marshfield, and others. By contrast, the NHS has sharpened the divides between hospital and community or ambulatory services, and the new reforms led by Langley will entrench them further. This lies at the centre of my new critique of the single-payer NHS reforms, published in Social Science & Medicine [Social Science & Medicine 72 (2011) 821-822]. Note that we recommend the NHS turn to US examples of integrated care like Intermountain, an irony your readers will appreciate.
A key point of the Intermountain article is that reviewing “the entire continuum that patients experience,” such as “home-based, clinic-based or inpatient care” leads to a focus on population-level health rather than on health care services. Marketing shifts from selling the latest procedure to selling health gain. This becomes the key point of the article’s conclusion as it describes how the current US payment system by procedure led Intermountain to lose more than it saved as it lowered costs for high quality, and how this needs to change if the US is going to move forward. Sadly, the NHS reforms now feature pay for performance or “payment by results,” which are really payment by procedures, with little systematic measure of results. The NHS is not the only single-payer system enamoured by market-based competition as the way to make its services more cost-effective, as students learn in the course I teach at Stanford on health care systems in advanced capitalist countries. (See http://www.kaiseredu.org/~/media/Files/EDU/Syllabus%20Library%20Files/Li….) The evidence shows that usually competition raises costs, fragments care as providers focus on more profitable patients or procedures, and increases administrative overhead. In my opinion, this is what has happened in the English NHS. One might think a single-payer national system would focus upstream on health and prevention, and the NHS does in some meaningful ways; but its reforms of medical services work against that goal and draw money away from it towards more costly “payment by results” specialty procedures once patients get seriously ill.
Finally, Michael Dixon, a national leader of GPs, and I have urged since 2004 that the NHS reorganize clinical leadership in an integrated way, and a key sentence in the Intermountain article states that “Physicians led almost all of the changes themselves.” So far, leaders of the English NHS have shown no interest in this idea, which has been critical to the success of Kaiser, Intermountain, and the VHA. I hope these experiences over the past 20 years enable your readers to refine their thoughts about what “single-payer” means and how it works. We need a more deeply textured and fully developed of that concept than reference to how a health care system is funded.
With best regards,
Donald W. Light
Lokey Visiting Professor, Stanford University
(See our book, The Risks of Prescription Drugs)
Donald Light’s message today included this link to a syllabus for a course he teaches at Stanford on health care systems in advanced capitalist countries; it contains a large number of invaluable references:
These are other references that relate more specifically to today’s message:
“Observations on the NHS reforms: an American perspective.” British Medical Journal 1991;303: 568-570.
“Betrayal by the Surgeons.” Lancet 1996;347: 812-3.
“Managed Care in a New Key: Britain’s Strategies for the 1990s.” International Journal of Health Services 1998;28:427-44.
“Is NHS Purchasing Serious? An American Perspective.” BMJ 1998;316:217-20.
“From Managed Competition to Managed Cooperation: Theory and Lessons from the British Experience.” The Milbank Quarterly 1997; 75:297-341 (Lead article)
“The real ethics of rationing.” BMJ (British Medical Journal) 1997;315:112-15.
“Managed Competition: Theory and Lessons from the British Experience.” Pp. 322-56 in Competitive Managed Care: The Emerging Health Care System. Edited by John Wilkerson, Kelly Devers and Ruth Given. SanFrancisco: Jossey-Bass, 1997.
“How Waiting Lists Work and their Hidden Agenda,” Consumer Policy Review (UK) 2000;10(4):126-132
“Here We Go Again: Repeating Implementation Errors.” BMJ (British Medical Journal) 1999;319:616-8.
“Managed Competition, Governmentality and Institutional Response in the United Kingdom,” Social Science and Medicine 2001;52(8): 1167-82.
How Intermountain Trimmed Health Care Costs Through Robust Quality Improvement Efforts
By Brent C. James and Lucy A. Savitz
Health Affairs, May 19, 2011
Since 1988 Intermountain Healthcare has applied to health care delivery the insights of W. Edwards Deming’s process management theory, which says that the best way to reduce costs is to improve quality.
Intermountain Healthcare is an integrated delivery system based in Utah and Idaho. Its network of twenty-three hospitals and 160 clinics provides more than half of all health care delivered in the region. Intermountain’s hospitals range from critical-access facilities in rural areas to large, urban teaching hospitals. Although Intermountain has an employed physician group and a health insurance plan, the majority of its care is performed by independent, community-based physicians and is paid for by government and commercial payers.
In 1986 an Intermountain team launched an effort to measure practice variation, focusing on the details of care in specific, common treatments.
What Intermountain Learned
First, most hospital admissions for a specific treatment had similar characteristics. Even for coronary bypass surgery, more than 80 percent of the patients showed similar severity and complexity of disease on admission, had no major complications, and achieved good clinical outcomes. The team did not find a single instance in which any one physician’s patients demonstrated higher levels of severity or complexity (“my patients are sicker”) than the patients of other physicians in the study.
In contrast, there was massive variation in physicians’ practices. Although use rates of particular treatment elements were consistent for individual physicians, they varied greatly across physicians. For instance, when the team examined individual treatment elements used for patients who were similar at hospital admission and achieved a good final outcome, it found that the highest physician-use rates were 1.6–5.6 times greater than the lowest rates. For each treatment, the hospital’s cost per case, not counting payments to physicians, showed about a twofold variation.
Despite deliberately choosing some of Intermountain’s highest-volume treatments and focusing on high-volume physicians, the study lacked sufficient statistical power to rank physicians accurately. It did not find any physician who was consistently a high or low utilizer across all of the elements tracked. Best patient care did not reside in any one physician. Every physician had something to learn, but also something to teach.
Finally, although the study could not accurately identify which physicians were providing optimal care, Intermountain could legitimately ask why physicians’ use rates were so different and what constituted best care.
Accordingly, the findings forced Intermountain to focus on the processes of care delivery that underlie particular treatments, rather than on the clinicians who executed those processes—the “measurement for improvement” approach discussed (in the full article). As the inquiry continued, the system was eventually able to document significant declines in physician variation. Physicians led almost all of the changes themselves. Declines in variation were associated with large declines in costs, while clinical outcomes remained at their original high levels. For example, Intermountain’s average internal cost for performing a total hip replacement fell from more than $12,000 in 1987 to about $8,000 per case in 1989.
The Intermountain clinical quality, financial utilization, and hospital efficiency analyses led the system to process management theory. Quality improvement is the science of process management. W. Edwards Deming, the father of quality improvement, argued that every process always produces parallel physical, cost, and service outcomes. In medicine, clinical outcomes correspond to Deming’s physical outcomes. Cost outcomes represent the resources expended to create the clinical outcome, and service outcomes describe the interactions between a care provider and a patient as the process takes place.
Deming carried his analysis one step further, demonstrating that most process changes that produce better physical outcomes also cause costs to fall, and that in most cases, the best way to reduce cost is to improve quality. Deming’s insights gave Intermountain the tools it needed to take broad advantage of the quality-cost relationship in clinical and administrative services.
Full article – free download for the next two weeks only:
W. Edwards Deming (Wikipedia):
This is what the accountable care organization (ACO) concept is all about. Intermountain Healthcare has confirmed W. Edwards Deming’s principle that “the best way to reduce cost is to improve quality.” Although ACOs have stumbled coming out of the gate (see qotd May 17 at pnhp.org), Intermountian has shown that we can achieve higher quality at lower cost without a cumbersome bureaucratic ACO construct.
Of particular importance is that the focus was placed on the processes of care delivery rather than on the clinicians who executed those processes. This opened up great possibilities for reform without the physicians feeling as if they were tiptoeing through a minefield of punishment and reward. The goal was purely better quality care for patients, and the savings to the system ensued almost automatically.
The full Health Affairs article can be downloaded for free during the next two weeks. I would strongly recommend doing so. It would also be worth your time to review W. Edwards Deming’s concepts, including his fourteen key principles, available at the Wikipedia link above. Both of these resources can help to readjust our mindset to meet the challenges of health care reform that still lie ahead.
What does this have to do with single payer? An automated financing system for health care would allow us to set aside our concerns about payment while we concentrate on quality processes for our patients. Everybody comes out ahead.
The following remarks were made by Karen Green Stone at the annual shareholders meeting of the giant health insurer WellPoint in Indianapolis on May 17. Green Stone is a member of Hoosiers for a Commonsense Health Care Plan, an affiliate of Physicians for a National Health Program. For the past several years she and other members of HCHP have challenged WellPoint’s profit-driven business practices on the floor of the annual meeting, urging shareholders to vote for a resolution demanding the company return to its nonprofit roots. They’ve received significant media coverage for their efforts, and their support for single-payer national health insurance has also been noted. An excerpt from her remarks on Tuesday was published in the Indianapolis Business Journal.
My name is Karen Green Stone from Bloomington. I own 15 shares.
Since last year’s meeting it’s estimated that another 50,000 people have died in the United States because they are uninsured. That equals the entire population of Kokomo [Ind.].
I’d like to start with comments made by friends and strangers I’ve talked to about coming to this meeting. “Give the bastards hell,” one said. “Go get ’em,” said another. “I hate Anthem,” a friend told me. Still another: “Don’t get me started.”
After hearing Wendell Potter speak in Bloomington on his book tour (I’m sure you all know Wendell Potter) a friend said to me, “I sometimes thought I was crazy, a conspiracy theorist – now I know they really are evil.”
I read and talked to Wendell about his book, “Deadly Spin.” What stirs my anger the most is the stealth and perversion you’ve used to shape public opinion. Your PR campaigns have nurtured fear and confusion in the minds of reasonable and caring Americans.
I imagine it must be very difficult hold steady the concept of “I’m a good person and I work for a corporation that by its very nature lacks compassion and is indifferent to suffering.” But good and intelligent people can sometimes fall into a trap.
Everyone in this room knows that it’s all about money and power. We know WellPoint’s sordid history of rescission, rigged software, cherry-picking of healthy patients and denial of care. We know about the barriers you build, making it so difficult that people give up or die fighting with you.
I hope that one or some of you in this room who feel the stirrings of having sold out will find the courage to go public with inside information because your business model is taking down America.
Angela, it takes 285 public school teachers in Indiana who earn an average of $47,000 a year to equal your 2010 compensation package of $13.4 million.
Would you kindly tell us why you are entitled to so much more than them?
Factors Associated With Closures of Emergency Departments in the United States
By Renee Y. Hsia, MD, MSc; Arthur L. Kellermann, MD, MPH; Yu-Chu Shen, PhD
JAMA, May 18, 2011
Our nationwide analysis of ED closures between 1990 and 2007 identified several risk factors that suggest economic drivers are associated with ED closures. Hospital-specific characteristics related to higher risk of closure were safety-net status, for-profit ownership, and low profit margin. After controlling for demographic and market factors, safety-net hospitals are at higher risk of closing their EDs compared with non–safety-net hospitals, suggesting that safety-net hospital status reflects other pressures that, although less measurable, are associated with ED closure. For example, some EDs have difficulty maintaining a full on-call panel of specialty physicians because of unwillingness of specialists to cover emergency calls, especially for poorly insured patients. While this finding deserves more study, it signals that safety-net hospitals may require particular attention if emergency care access is to be sustained.
Hospitals in counties where a high proportion of residents live in poverty were more likely to close their EDs than hospitals in more economically secure communities. Factors such as crowding and the increasing challenges of providing high-quality care in the face of burgeoning demand could contribute to difficulty in recruiting and maintaining staff at all levels. These community-characteristic findings are especially compelling given that vulnerable populations, including those in minority groups and both uninsured and underinsured patients, use EDs for acute care at greater rates than other populations. As more of these patients lose access to primary care, an increasing number of EDs are meeting criteria as safety-net facilities, which suggests that more EDs may be at risk of closing in the future. ED closures can have substantial effects on vulnerable communities, causing a decline in care as hospitals serving poor and minority populations select to provide services based on profitability rather than community health needs.
Local market competition is strongly associated with the ability of an ED to remain open. The presence of other EDs within a 15-mile radius and highly competitive markets are both associated with increased risk of ED closures. Previous literature reported that emergency services in areas with poor payer mix are often money losers. Our study extends this finding, showing that market forces, beyond profit margin alone, are substantially related to the ability of an ED to remain open.
Our findings expand the evidence base by showing that economic factors related to ED closures are similar to those related to hospital closures and may be even stronger. All factors (except for the increased risk of hospitals serving a higher proportion of patients in poverty) identified in our study can be shown to be market-driven. Profit margin, for example, is influenced by a number of factors ranging from patient payer mix, reimbursement decisions from payers (and negotiated discounts between hospitals and payers), to competition. Market factors may also be the reason that many for-profit hospitals choose not to provide emergency services.
In some areas, the episodic closure of EDs may be of little consequence, particularly in competitive health care markets where nearby facilities can deliver the needed clinical care for patients who seek ED treatment. Some might assert that such “creative destruction” is a manifestation of a healthy marketplace. However, the market economics of US health care, particularly emergency care, are distorted by the fact that 51 million Americans lack health insurance, and another 48 million are covered by Medicaid and other forms of public insurance that reimburse well below cost. With health care reform, the numbers of individuals covered by Medicaid and other forms of public insurance are likely to increase substantially, with far-reaching implications if these patients cannot access timely and adequate care. In most of the US health care system, an effective business strategy is to minimize uncompensated costs by declining to treat these patients, but EDs cannot do so.
The economic challenge of operating an ED in the face of a federal obligation may explain, in part, why for-profit hospitals were twice as likely to close their EDs as facilities that are nonprofit or publicly owned. It may also explain why hospitals in the lowest quartile of profitability (essentially, negative profitability) and those in highly competitive markets were more likely to close their EDs. Yet even after controlling for these and other characteristics, we observed that safety-net hospitals were significantly more likely to close their EDs than hospitals that did not serve this role.
The closure of an ED can have profound repercussions for a community. Closures can adversely affect access to emergency care for everyone—insured and uninsured alike. Hospital closures significantly affect access to care not only by increasing the distance to the nearest hospital but also by increasing the patient load at neighboring hospitals. ED crowding degrades quality of care, not only by prolonging patient waiting times and increasing the rate of patients who leave without being seen, but also in terms of outcomes, including increased rates of morbidity and mortality. Because Medicaid, SCHIP, and uninsured patients are highly reliant on hospital EDs for acute care, ED closure can displace tens of thousands of uninsured and low-income patients to other EDs, worsening crowding and potentially setting the stage for additional closures.
Our findings underscore that market-based approaches to health care do not ensure that care will be equitably distributed. In fact, the opposite may be true. As long as tens of millions of Americans are uninsured, and tens of millions more pay well below their cost of care, the push for “results-driven competition” will not correct system-level disparities that markets cannot—and should not—be expected to resolve.
In summary, this study demonstrated that from 1990 to 2009, the number of hospital EDs in nonrural areas declined by 27%, with for-profit ownership, location in a competitive market, safety-net status, and low profit margin associated with increased risk of ED closure.
We have a crisis with closures of our emergency departments. With our current dysfunctional mechanisms of financing health care – mechanisms that are perpetuated by the Affordable Care Act – market considerations rather than medical need are driving these decisions. The more vulnerable populations suffer the most.
Many of the affluent individuals who have had great influence over the reform efforts may not care that safety-net emergency departments are shutting down, but they should. They could become victims of major traffic accidents and taken through rush hour traffic to their preferred for-profit emergency departments. If they had to ride past padlocked safety-net emergency departments to the other side of town, they could DIE no matter how much money they had or how good their private insurance is.
A well designed single payer system includes regional planning and separate budgeting of capital improvements. Decisions on the location and funding of Emergency Departments are made based on community need rather than on market considerations.
Maybe most of the rich don’t care about the rest of us, but you would think that, at least, they would care about themselves and their families.
Letter to Donald Berwick, M.D., Administrator, CMS
American Medical Group Association
May 11, 2011
Re: Medicare Shared Savings Program: Accountable Care Organizations
We write today, however, to express our serious concerns over the direction of the Proposed Rule. On its face, it is overly prescriptive, operationally burdensome, and the incentives are too difficult to achieve to make this voluntary program attractive. As you know, most policy experts believe multi-specialty medical groups are best poised to become ACOs in the short term. However, in a survey of AMGA members, 93 percent said they would not enroll as an ACO under the current regulatory framework.
Our membership’s concerns were many and focused on issues such as the risk sharing requirement, static risk adjustment, retrospective attribution, quality measurement requirements, the Minimum Savings requirements and others. Without substantial changes in the Final Rule, we fear that very few providers will enroll as ACOs and that CMS and the provider community will miss the best opportunity to inject value and accountability into the delivery system.
Letter to Donald Berwick, M.D., Administrator, CMS
The Everett Clinic
Univ. of Michigan Med. School
St. John’s Clinic
Novant Medical Group
Middlesex Health System
May 12, 2011
On behalf of the multi-specialty groups participating in the Physician Group Practice (PGP) Demonstration Program, we are writing to you today regarding Section 3022 of the Affordable Care Act’s notice of proposed rule-making (NPRM) for the Medicare Shared Savings Program/Accountable Care Organizations (ACOs).
However, as presently proposed, we ALL have serious reservations about the economics and the complexity of the Medicare Shared Savings Program/ACO NPRM. All of our organizations are planning to individually respond with our own respective concerns, but broadly, the “Shared Savings” model/NPRM has the following aspects that are problematic:
* There is downside risk during the initial 3-year term, unlike the recently concluded PGP Demonstration project. Such downside risk is compounded by significant investment cost on the part of the ACO.
* Savings are measured net of 2% threshold for the one-sided risk model. Additionally, the Minimum Savings Rate (MSR) is set at high levels for ACOs with lower enrollment.
* Limits placed on accounting for beneficiary acuity level that is documented and appropriate will dilute true savings realized by the ACO, and is a disincentive for management of patients with complex care needs.
* There are a large number of quality measures, especially new quality metrics in several domains, that go into effect starting year one. As an example, on average, it costs about $30,000 just to program a single new quality metric. This NPRM has more than 60 new ones, which equates to nearly $2,000,000 for each organization. The excellent results produced by the PGP demonstration are evidence of the benefits of a careful expansion of quality measures.
* Retrospective attribution places limits on the ACO’s ability to bend the cost curve. It impedes optimal patient engagement, timely program planning and course correction, and compounds underlying issues of claims lag and financial settlement.
* The logistics associated with Medicare beneficiaries’ opt-out of the ACO program is simply not practical. We believe this would lead to beneficiary and physician confusion on the terms of engagement.
As currently proposed, ACOs have a greater potential for incurring losses under either track, than for generating savings. This risk-reward imbalance makes it difficult, if not impossible, for internal decision-makers to accept the financial design.
ACO start-up costs higher than estimated, AHA study says
By Rich Daly
ModernHealthcare.com, May 14, 2011
Accountable care organizations will likely face start-up and first-year costs six to 14 times higher than HHS has estimated, according to a study released by the American Hospital Association.
The study, which was based on an analysis of previous research, concluded that the various elements required to successfully manage the care of a specific population will cost between $11.6 million and $26.1 million—depending on the size of the hospital or hospital system involved in the ACO—and far more than the $1.8 million estimated by the CMS in its proposed rule.
The cost findings are based on 23 different capabilities that ACOs will need to develop across four categories: network development and management; care coordination, quality improvement and utilization management; clinical information systems; and data analytics.
The accountable care organizations (ACOs) called for in the Accountable Care Act (ACA) don’t seem to be getting off to a good start. Most medical groups do not intend to participate, the hospitals have found that they are too expensive, and the distinguished participants in the Group Practice Demonstration Program all have serious reservations about the proposed rules for ACOs under the ACA. What is going on here?
The goal seems to be to establish integrated health care delivery systems with varying design characteristics based on local needs and logistical considerations. Size and complexity would vary greatly. Such systems should provide a primary care base for entry into the system and for coordination of services. Specialty care should be integrated within the system, providing appropriate access and interaction with primary care. Information technology systems should enable access to clinical records while providing tools that reduce error and duplication of services, while assisting with clinical decisions. Basically, we want health care professionals and hospitals working together to provide more efficient, higher quality care for everyone.
That is the concept behind ACOs. Integrated systems would be rewarded based on quality and efficiency (i.e., lower costs). Because of political considerations, Congress decided that they should apply the ACO concept exclusively to Medicare, while letting the private insurers supervise their own quality and cost programs.
The simplistic solution was to establish the Medicare Shared Savings Program. Reduced costs would be built in by rewarding the ACO systems with a portion of the funds that they saved, and ensuring quality by making the rewards dependent on meeting certain quality measures. The problem with this became evident when it came time to write the rules. Not only were the systems required to enable this very expensive, the rules would create what bureaucracies are so adept at creating – a bureaucratic quagmire. The letter from the participants in the Group Practice Demonstration Program list some of these aspects that proved to be problematic.
Bundling of payments has been another approach, but only certain clinical presentations conform well to bundling. So it would not be an answer to the majority of clinical problems. Also bundling removes risk from the common financing pool and splits it up amongst the providers of health care. Luck or lack thereof plays too great of a role to ask the providers to place bets on it merely by agreeing to accept patients with conditions subject to bundling.
Much of the difficulty has stemmed from the new, widely touted principle that we should no longer pay for volume but instead we should pay for quality and efficiency, but both quality and efficiency have proven to be very difficult to define. The default has been a few parameters of each which in no way can represent the broader spectrum of quality and efficiency.
Health care is a lot of work. No matter what else, the delivery system will have to be paid primarily on volume, but we need to get the volume right. Much attention has been paid to excess volume being driven by the rewards of fee-for-service care. In fact, the largest volume increase has been in imaging services, yet most physicians who order the procedures are not compensated for these services. The Dartmouth variations do remain of concern and further attention in defining these is certainly warranted.
The greater problem with volume has been demonstrated to be underutilization of services. According to a RAND study, most patients receive only about half of the care that they should have. The emphasis on reducing the volume of care has been somewhat misguided since there is a greater need to increase the volume, though we need to get the pricing right when we do that. The SGR dilemma must be addressed, but the basis for it will not go away.
The bottom line? Integrated health systems that are designed for optimal patient service are an admirable goal, but integrated health systems designed predominantly as a business model are not. ACOs designed to comply with the Medicare Shared Savings Program are an abstract concept that will never fly, as today’s quotes indicate. On the other hand, ACOs designed as a business model – the so-called commercial ACOs – are just another label for the intrusive managed care organizations that most of us have been trying to get away from.
The goals of higher quality at reasonable costs would best be achieved by humanitarian integrated health systems financed not by a dysfunctional, fragmented system of private and public plans, but rather by a publicly-financed and publicly-administered universal risk pool – an improved Medicare for everyone.
The ACO misstep is more of a problem of well intentioned but misdirected policy application. The now-tarnished ACO label should be dropped as we move forward with mutual efforts to improve the quality and efficiency of our health care delivery system so it works well for all of us.
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