Sluggish savings under accountable care organizations

Posted by on Thursday, Nov 9, 2017

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.

Explaining Sluggish Savings under Accountable Care

By Valerie A. Lewis, Ph.D., Elliott S. Fisher, M.D., M.P.H., and Carrie H. Colla, Ph.D.
The New England Journal of Medicine, November 9, 2017

Despite aggressive targets set by Medicare for the spread of value-based payment arrangements and widespread agreement on the importance of delivery-system reform, progress toward lower spending growth and a transformed delivery system has been slow. Accountable care organizations (ACOs) are a prime example: nearly 1000 organizations operate as ACOs, but they have generated limited savings.

Myriad context-specific factors affect the performance of individual ACOs, but few characteristics have been shown to systematically explain ACO performance. We identified four cross-cutting explanations for the failure of ACOs to achieve savings right away (or at all) — two economic and two organizational. Economic explanations emphasize the breadth and depth of financial incentives in ACO programs, whereas organizational explanations emphasize organizational processes and complexity.

Economists worry about weak incentives. In the Medicare Shared Savings Program, nearly all participants opted to receive a bonus if they generate savings but bear no financial responsibility for losses. Transitioning providers to sharing in downside risk may result in greater behavior change and savings, although the literature on this subject is mixed. A second explanation suggests that having more patients covered by ACO-like contracts may strengthen incentives. Providers with few patients covered by ACO-like contracts face a problem colloquially described as “having a foot in two canoes.” Initiatives that generate savings in the care of a provider’s ACO patients will reduce income from its fee-for-service patients — an effect that led some integrated networks to fail during the managed care era. Until providers reach a tipping point in the number of patients covered by risk-based contracts, it will be hard for organizations to generate substantial savings.

We believe that all ACOs would benefit from having more patients covered by ACO-like contracts, something we routinely hear from providers. Lack of downside risk may help explain the performance of integrated delivery systems: complex existing systems might require stronger financial incentives to change their behavior. In contrast, the increasing proportion of physician-group and hospital-coalition ACOs achieving savings over time suggests that sharing in downside risk may not be necessary for these types of ACOs to generate cost savings if they are given enough lead time.

Economic explanations suggest that the key issue is motivation: providers know how to save money, but they need financial motivation to change their behavior. An alternative set of explanations draws on organizational theory and literature and suggests that providers either don’t know how to achieve savings (at least initially) or that they have to focus on other things — such as organizational, start-up, and compliance work — before they can implement the changes necessary to save money.

One organizational explanation for the progress that different kinds of ACOs have made toward generating savings relates to knowledge: when joining an ACO, independent physician practices with little knowledge of new care models may have ideas about how to save money, but they may need time to work out what to do and how to do it. Such groups may need to explore care management models or learn how to improve care transitions. This explanation may be particularly apt for outpatient-physician–practice ACOs and some hospital-coalition ACOs that are new to the game.

Another organizational explanation is that the complexity of ACOs affects their performance. First, most ACOs are not preexisting organizations; they are collections of independent providers, such as a community hospital and local private-practice physicians who decided to pursue an ACO contract together. These new organizations must accomplish a great deal of foundational work, such as forming a board; determining how to share bonuses; and completing tasks that require internal coordination, such as reporting quality measures. Then they must agree on and implement a joint strategy for pursuing cost savings. In these ACOs, we expect that progress toward generating savings may be delayed, because setting up a functional ACO will initially require attention and effort.

Second, organizational complexity probably challenges integrated systems. Although all ACOs must learn how to change ingrained practices among clinicians, the large, complex, and diverse networks of providers in an integrated delivery system present an added challenge for clinical transformation. Overcoming the inertia in these systems may be like trying to turn a large battleship. In contrast, outpatient-physician–practice ACOs are small and have a simple organizational structure, which probably makes them more nimble and able to more quickly implement (or discard) new initiatives — and generate savings. Newly formed coalition ACOs must spend time developing organizational infrastructure, but these groups aren’t encumbered by existing organizational processes.

We believe these explanations support taking a nuanced approach to encouraging, motivating, and rewarding providers. For all providers, moving a greater share of patients to value-based payment arrangements may support efforts to transform care and remove the barrier of conflicting incentives. Larger, integrated systems may benefit from a wider breadth of incentives and from stronger incentives that include sharing in downside risk. Shifting too quickly to risk sharing for newly formed ACOs, however, could backfire: among a subset of ACOs, it may be critical to allow providers enough time to settle into new organizational forms and develop and implement strategies in a deliberate and thoughtful manner. ACOs are as diverse as the U.S. health care system, and saving money in health care is notoriously hard. Developing policy approaches that accommodate this diversity will be important for payment and delivery reform to achieve its potential.…

Elliott Fisher developed the concept of “accountable care organization,” proposing that health care providers across a continuum could improve quality and more effectively control costs by sharing accountability for patient care. It sounded like a reasonable approach and it rapidly gained traction as various entities, with public and private support, implemented them even though there was little understanding as to exactly what they were.

There are now a plethora of reports, including this one, that confirm that, whatever they are, they are smoldering along and really not delivering on their promise of higher quality at lower cost. Most of these reports also suggest that the grand experiment should continue because “there must be a pony in there somewhere.” Unfortunately, they are largely ignoring the diversion of effort and resources to these entities while not accounting for the greater economic losses from the administrative excesses nor for the impairment resulting from an increase in physician burnout.

This certainly does not mean that we should discontinue efforts to improve quality and reduce wasteful spending, but there are more effective ways to do this. One of the more important measures would be to enact a well designed single payer national health program. The administrative savings alone is far more than ever could be achieved through any iteration of an accountable care organization. Also, establishing a health care financing system that places the patient first creates a financing infrastructure that automatically drives quality.

Dr. Fisher and his colleagues deserve credit for their ongoing efforts to encourage changes that would improve value in health care through higher quality while reducing wasteful services. But we have enough experimental data now that we should no longer defer enactment of single payer merely because we hope that accountable care organizations will fix our system. They will not. Enough minds have cranked out enough ideas that we know that there is no magical accountable care infrastructure in our future that will produce the dramatic changes we all wish would occur.

Let’s get on with enacting an improved Medicare program that covers everyone. Under such a system we can continue to strive for higher quality and reduce care that is not beneficial, but in a system that brings greater satisfaction to patients and to their health care professionals.

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Adam Gaffney on the right to health

Posted by on Wednesday, Nov 8, 2017

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.

TO HEAL HUMANKIND: The Right to Health in History

By Adam Gaffney, M.D.

From the Introduction

Thus, where the human right to healthcare is indeed a recent rhetorical convention and ethical notion, ideas and practices around the right to healthcare – that is, around healthcare universalism – stretch back considerably further. Yet a conceptualization of a “right to healthcare” developed over time in tension with the far more typical practice of providing healthcare as a commodity or consumer good. In some moments and places, healthcare was conceived of and provided by right on the basis of needs; more typically, it has been a service sold on the basis of means, like other commodities.

The first aim of this book then is to trace what might be termed a healthcare “rights-commodity dialectic” through history…

The second aim of the book is to examine how healthcare rights are realized. Where and why rights to healthcare goods were fought for – and achieved – relates little to changing interpretations of rights and more to political struggle and economic change. Though ideas about equality have existed since antiquity, constituencies strong enough to challenge social, economic, and, indeed, healthcare inequalities have usually been too scattered over time and space to challenge the status quo in a meaningful way. Potent proposals for social welfare, including healthcare, most often arose when such constituencies became sufficiently mobilized to at least be perceived as a credible threat: examples in Europe include (among others) the eras of the English Civil War, the French Revolution, the Revolution of 1848, and the years following the Second World War; in the United States, such periods include the New Deal era and the Civil Rights era; and in the developing world, as we will see, revolutionary moments during the post-colonial period were most critical (to generalize broadly). The emergence of such political challenges, in turn, can only be understood in the setting of innovations, disruptions, and profound strains imposed by an economic system that evolved not gradually, but in great fits and starts, whether that be the advent of industrial capitalism in the nineteenth century or of economic crises like the Great Depression in the twentieth.

Similarly, the successes and the failures in the achievement of the human right to healthcare in the twenty-first century – the healthcare right-commodity dialectic today – have to be understood in the context of the latest stage of global economic history, what is often called “neoliberalism.” The mobilization of corporate power in the past few decades has often served to substantially favor the commodification of healthcare services throughout the globe, to constrain the vision of universal healthcare reform in the United States. Still, the story is by no means all negative: during these very same decades, there have been activist movements and even major political achievements that have helped enhance the right to healthcare, in ways small and large, in countries throughout the world.

The fate of the “right to healthcare” – whether it will rise to a universal reality, remain a privilege for some classes or some nations, or shrink to little more than pleasant but irrelevant rhetoric – will, in the final analysis, depend on the outcome of such struggles.

From Chapter 3: Public Health, Social Medicine, and Industrial Capitalism

One day during the cold Scottish spring of the year 1838, three impoverished women – all out of work, all with young children – were seen by the physician William Pulteney Alison. Alison cam from an established family and was a very prominent physician in Edinburgh. Yet throughout his career, Alison had also served as a physician to the poor.

All of the women, he later recounted, were living in a “miserable state of destitution.” There was little relief to be had from the public purse: the nineteenth-century Scottish Poor Law, even in comparison to the English Poor Law, was notable for its draconian frugality and largely voluntary system of funding. And so, when the women were denied admission to the local workhouse, they – and their infants – were essentially left to their own meager resources. After several weeks of “severe suffering,” as Alison noted, all of the children – presumably from some combination of cold and malnutrition – were dead.

Alison told this story in his 1840 “Observations on the Management of the Poor in Scotland, and Its Effects on the Health of Great Towns.” In this book, he does not simply bemoan the inevitable sadness of life, but instead counters the establishment Malthusian notion that attempting to improve the condition of the poor through public aid would not be useful, and indeed would only worsen their moral condition. Alison seemed to find such arguments repulsive. Reflecting back on his encounter with the three women and their children, he thought the neglect of the poor was shameful, and that the resultant loss of life was as preventable as it was reprehensible. “If any one supposes,” he wrote with more than justified acidity, “that the effect of this sacrifice of innocent life was to improve the morals of these women or their associates, I can only say, that he knows nothing of the effect of real destitution on human character and conduct.” What they deserved was neither moralistic rejection nor the unpredictable provision of voluntary charitable relief, but instead the supply of relief by public provision, by way of right. Alison advocated a relatively more expansive system of welfare for Scotland, which would be supported by taxation and include medical staff to treat the sick poor.


In March 1848, unrest broke out in Berlin, a turn of events that brought (Rudolf) Virchow, eager to be involved, back to his city. Indeed, soon after his return, Berlin was in full revolt, and he did not hesitate to join the barricades. Following the initial success of the Berlin revolution, Virchow then became involved in the Prussian “medical reform” movement, and with a friend, Rudolf Leubuscher, started a journal of that name. In the first issue of his journal, Virchow put forth the egalitarian aims of the movement. “Medical organization is to be reformed not so much for the benefit of physicians as for that of the patients,” he wrote, and later continued with the argument that “physicians surely are the natural advocates of the poor and the social problem largely falls within their scope.” In subsequent issues, his articles dealt with a wide array of social and political issues connected to medicine. He argued against capital punishment, for the gradual end of war, and in favor of a variety of reforms ranging from social welfare and the regulation of working hours to periodic physician recertification. He also touched poignantly on the notion of a right to health and healthcare that government is responsible to ensure, arguing that “the concept of all having equal rights to healthful existence follows form the definition of the state as the moral unity of its members, i.e. of individuals enjoying equal rights and obligated to act in solidarity. The endeavor of the state to implement these rights mainly falls to the Public Health Services.”…

There is much discussion today about the right to health care. Adam Gaffney provides us with a thoroughly researched history of the sociological and economic considerations of the concept right up to the present day. He provides us with a springboard not simply for the rhetorical dialectic, but, more importantly, for what use we make of our knowledge of what has transpired and use that to make this a better world, not just for our health and health care, but with the more ambitious goal of achieving social justice for all.

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Inequity of means-testing federal health benefits

Posted by on Tuesday, Nov 7, 2017

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.

NBER Working Paper No. 23990; Means-Testing Federal Health Entitlement Benefits

By Andrew Samwick
National Bureau of Economic Research, November 2017


Recent federal legislation has linked the price paid for health insurance benefits to current income. Under the Patient Protection and Affordable Care Act of 2010, individuals and families with income as high as 400 percent of the federal poverty level are eligible for premium tax credits that limit their health insurance premiums to under 10 percent of their income. Under the Medicare Modernization Act of 2003, higher-income beneficiaries face income-related premiums over three times the standard premium for Part B coverage. For workers at or near retirement age, means-testing based on current income provides an incentive for early retirement, dissaving, and income manipulation, raising concerns about the efficiency of such means-testing. Further, current income is subject to short-term fluctuations, making it a noisy predictor of ability to pay. Using the Health and Retirement Study and linked Social Security earnings histories, this paper introduces a measure of lifetime income that compares favorably to current income as a basis for means-testing. It offers less short-term variation in premiums while improving incentives for pre-retirement work and saving.

From the Conclusion

Policy makers must balance equity and efficiency considerations when designing social insurance programs. Both the Medicare Modernization Act of 2003 and the Affordable Care Act of 2010 introduced means-testing of federal health entitlement benefits based on current income. Means-testing based on current income for those near or in retirement has several disadvantages as a basis for entitlements: it provides incentives to lower income by reducing saving and work; it provides incentives to manipulate income or change its composition; and it bases transfers on a noisy measure of ability to pay. Against these disadvantages is the possibility of providing insurance against adverse shocks to current income. This paper provides a first analysis of the extent to which the provisions of these laws have introduced these disadvantages relative to means-testing based on Medicare Average Earnings, a measure of lifetime income based on earnings subject to the Medicare payroll tax.

This study has illuminated the need to measure and evaluate the extent to which means- testing on current income introduces economic inefficiencies and inequities.

To the extent that the use of current income is shifting behavior in unproductive ways, means-testing based on lifetime earnings can be considered as a potential alternative.…

This paper is important because it demonstrates the counter-intuitive inefficiencies and inequities of means-testing federal health benefits, particularly for Medicare Part B premiums and for premium tax credits under the Affordable Care Act. The author suggests that this unfairness can be mitigated partially by using lifetime earnings instead of current earnings to determine the means-tested premium contribution for these federal programs. But this ignores the most serious flaw in using means-tested premiums and that is that premiums are used at all.

In an equitable health care system the financing of health care and the delivery of health care services should be totally separated. Everyone should have equal access to the health care delivery system based on medical need, with income or wealth playing no role. The financing of the system should be based on ability to pay. The latter is easy since the universal risk pool can be financed through progressive taxes.

A wealthy nation should be able to support, through equitable taxes, a health care system that has adequate capacity and provides appropriate access to primary care and specialized services. Charging premiums decreases equity since the burden is inversely related to income. Means-testing the premium reduces that inequity but it also reduces the political support of higher-income individuals who might resent paying more. Since the wealthy have a much greater political voice, there likely would be a greater effort to further privatize Medicare, fragmenting the Medicare Advantage market into Cadillac plans for the wealthy and an underfunded, spartan public plan for the masses.

One of the improvements for an Improved Medicare for All should be to eliminate any premiums and cost-sharing so that everyone has equal access to health care regardless of means.

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Nobel Laureate Richard Thaler on why we choose the wrong health plans

Posted by on Tuesday, Nov 7, 2017

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.

Why So Many People Choose the Wrong Health Plans

By Richard H. Thaler
The New York Times, November 4, 2017

If you get health insurance from your employer, you have to make decision every year about which coverage to choose.

So here is a warning: If you are simply sticking with an old plan with a low deductible, that may well be a wrong and costly choice.

Because of human quirks, lack of understanding and overly complicated plans, many people are paying more without getting anything extra in return.

Economists have a term for a situation like this, where one option is better than another under any circumstances, dominance. And that is what we see in many workplaces: The cheaper health care plan, at every level of medical spending, often has a higher deductible — a higher spending hurdle that must be reached before reimbursements begin.

(He describes studies showing that the high deductible plan is usually the more rational choice.)

There are, however, many financial incentives for going the high-deductible route. Some are embodied in health savings accounts, of H.S.A.s, which provide tax breaks and are only offered in combination with high-deductible plans.

There is another compelling advantage: Many companies contribute to these accounts for their employees.

I realize this is all complicated. Unfortunately, it is impossible to say which specific plan is best for your family without looking closely at the details.

If you want hints about how to crunch the numbers for yourself, the accompanying article may help you.***

Richard H. Thaler, a professor of economics at the University of Chicago, has won the 2017 Nobel Memorial Prize in Economic Sciences.…


Which Health Plan Is Cheaper?

By Richard H. Thaler
The New York Times, November 4, 2017

But there is an imperfect, yet fairly, simple way to check whether a high-deductible plan might qualify for “no-brainer” status, meaning, it enables you to save on health care no matter how often you go to the doctor.

Start with your premiums

Figure out how much you would have to pay in total annual premiums for low- and high-deductible plans.

Do a zero-expense test

Then turn to the high-deductible plan. If your employer contributes to a Health Savings Account for you, subtract that amount — say, $1,000 — from the cost of the premiums.

Compare the result for the two plans. The high-deductible plan is bound to be cheaper. The difference is how much you would save if you have zero health care expenses.

Clear the high-deductible hurdle

Next, try a test that is more difficult for high-deductible health plans: Consider what happens if your expenses are exactly equal to the deductible for each plan.

For example, say the low-deductible plan has an annual premium of $3,650 and a deductible of $1,000. You’d pay $4,650 if your bills equal the amount of the deductible.

By comparison, the high-deductible plan has an annual premium of $2,000 and a deductible of $3,250. You would spend $5,250 if you hit the deductible, except for one important thing: Your employer contributes $1,000 to your H.S.A., so your total costs only come to $4,250.

That is $400 less than the amount for the low-deductible plan.

So far, in this case, the high-deductible plan is a “no-brainer.”

Do it all again

Finally, repeat these steps, using the maximum-out-of-pocket limit for each plan in place of the deductible. If the high-deductible plan is still cheaper, it may be a “no-brainer.”

That’s it. You’re done with the simple test.

A note of caution

Remember, these calculations are not perfect because there are complicating factors.…

Last month Richard Thaler received the Nobel Prize for his work in behavioral economics, showing that people are “predictably irrational, consistently behaving in ways that defy economic theory” (NYT, Oct 9). Thus he is quite qualified to explain to us why it is irrational to choose a health plan with a low deductible rather than a high deductible, though he does concede that it is complicated.

The example he uses shows that the employee will pay less for care that reaches the amount of the deductible providing the employer contributes $1,000 to the employee’s health savings account (HSA). Of course, the insurance actuaries do not assume that $1,000 of the deductible will be forgiven, thus the actual premium does not reflect that savings. In essence, by making the $1,000 contribution, the employer has reduced the deductible by that amount whereas the premium is set for a plan with a deductible that is $1,000 higher. There are many other potential variables that the insurance actuaries will not miss thus ensuring that the premium paid to the insurer is set at the optimum level balancing competitive pricing with insurer profits.

Thaler barely touches on a more important consideration here under behavioral economics. Faced with higher deductibles patients will reduce their use of often beneficial health care services which can impair their health outcomes. This is the opposite of what we should expect from a health care financing system. Instead the system should assist patients in receiving the care that they should have.

Imagine behavioral economics under a single payer system with first dollar coverage. With no deductible, the patient makes the decision to access care based on perceived need for that care. That is as it should be. There is no need to complicate that decision by adding consideration of out-of-pocket expenses for the care. The economic decisions are limited to investment of time, loss of hours at work, and perhaps incidentals such as transportation which still may be significant, but not a matter of health insurance design.

Thaler suggests raising premiums and putting the extra money into an HSA so that there is enough to cover the full deductible, or, even better, the employee’s maximum cost sharing so the individual would not have to worry about deductibles or other out-of-pocket costs. This would do what a single payer system with first dollar coverage would do except with much greater administrative complexity and consequent waste of resources.

Let’s take advantage of our understanding of behavioral economics and set up an efficient system in which individuals simply obtain the care they need when they need it, without any worry about how they are going to pay for it. A single payer national health program would do just that.

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‘Choosing Wisely’: How much low-value care is preventable?

Posted by on Friday, Nov 3, 2017

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.

Choosing Wisely Campaign: Valuable For Providers Who Knew About It, But Awareness Remained Constant, 2014–17

By Carrie H. Colla and Alexander J. Mainor
Health Affairs, October 24, 2017


Together with physician specialty societies, the Choosing Wisely® campaign has codified recommendations of which health care services’ use should be questioned and discussed with patients. The ABIM Foundation administered surveys in 2014 and 2017 to examine physicians’ attitudes toward and awareness of the use of low-value care. The surveys included questions on the factors driving that use, physicians’ comfort in having conversations with patients about that use, and physicians’ exposure to the Choosing Wisely campaign. Despite continued publicity and physician outreach efforts, there were no significant changes between 2014 and 2017 in awareness of the campaign among physicians (awareness increased from 21 percent to 25 percent) or physician-reported difficulty in talking to patients about avoiding a low-value service (42 percent reported that such conversations had gotten harder in 2014, and 46 percent did so in 2017). Barriers to the adoption of recommendations included malpractice concerns, patient demand and satisfaction, and physicians’ desire for more information to reduce uncertainty. Multifaceted interventions that reinforce guidelines through personalized education, follow-up, and feedback, as well as aligned financial incentives, should be pursued to reduce the use of low-value services.

From the Introduction

Low-value care — care that provides little or no benefit to patients given costs, patients’ preferences, and available alternatives — is widespread in the United States. It is commonly estimated that up to 30 percent of care is waste, which contributes substantially to costs. Since its founding in 2012, the ABIM Foundation’s Choosing Wisely® campaign has sought to address the overuse of care by providing physicians and patients with information and training on potentially low-value services. While Choosing Wisely services vary widely in their potential impact on care and spending, they are a starting point in the conversation between patients and providers about low-value care.

Most physicians familiar with the campaign believe that it is valuable. However, it has yet to make a large difference in physicians’ or patients’ behavior.

Drivers of the use of low-value care

Physicians were asked to identify drivers of low-value care use, regardless of whether they thought the drivers were “major” or “minor” contributors to the use of that care. The most common reasons identified in the 2017 survey for ordering an unnecessary test or procedure were physicians’ malpractice concerns (87 percent), physicians’ desire for more information to reduce uncertainty (84 percent), and “just to be safe” (78 percent). On average, respondents identified five distinct reasons for the use of unnecessary care. Notably, all of these reasons increased in frequency from 2014 to 2017. The increases were significant in the case of not enough time to spend with patients, malpractice concerns, keeping patients happy, having access to new technology in the practice, feeling that patients should make the final decision, fee-for-service payment, and the physician wanting more information for reassurance.

From the Discussion

The estimates of awareness of the Choosing Wisely campaign in this survey are considerably lower than other estimates. Primary care providers have shown greater awareness of the campaign than specialists. Reports of the following barriers to reducing the use of low-value care in other research have been consistent with our findings: malpractice concerns and patient demand for services, concern about missing a serious diagnosis, community standards of care, lack of time to engage patients in shared decision making, the number of tests and treatments recommended by specialists, the proliferation of clinical performance measures with uncertain links to quality of care, and financial incentives.

Little empirical evidence has been found to support two commonly identified barriers to reducing the use of low-value care: demands from patients and physicians’ fear of malpractice liability. The demand for inappropriate services occurred in fewer than 1 percent of patient-clinician encounters in cancer care. This “myth of the demanding patient” — the idea that eager patients, rather than physicians, are driving the proliferation of unnecessary tests and procedures — risks leading to an underestimate of the impact of physicians’ choices on the provision of low-value care.

Physicians’ fear of malpractice liability is also commonly identified as a major contributor to the use of low-value care. However, empirical research has found that “defensive medicine” contributes roughly 3 percent to overall health care spending and that physicians do not change how they practice in response to changes in malpractice liability.…

It is often stated that 30 percent of health care could be eliminated without impairing medical outcomes. An effort to reduce low-value care – sometimes referred to as “medical waste” – is what the Choosing Wisely Campaign is all about. Specific presumed low-value services were selected and widely publicized as services that could be sharply reduced in volume and thus reduce our excess spending on health care.

Although this seems like a good idea, the program has been quite ineffective. Use of these services has been driven primarily by physicians rather than patients (“myth of the demanding patient”). Although physicians frequently claim that the purpose is to reduce the risk of malpractice liability, much of it is to reduce uncertainty or “just to be safe.”

Everyone would agree that care that is never of any value at all should be abandoned. But it is much more difficult to determine at which threshold care that is of low value should be abandoned. “Although the probability is low, this just might be an instance where this procedure would benefit my patient.” Besides, when recommendations for common serious disorders keep changing (mammography, PSA screening, etc.), how could we ever develop clearly consistent guidelines for management of the multitude of lesser disorders?

So the costs of that 30 percent of health care that is considered to be medical waste would be very difficult to recover, as the Choosing Wisely Campaign is demonstrating. That isn’t to say that we shouldn’t keep trying to reduce what might be unnecessary care, but we should not allow this effort to detract from proceeding with other reform that can recover a massive amount of waste – administrative waste, that is. A well designed single payer system would recover hundreds of billions of dollars by eliminating the administrative waste that is so prevalent in our dysfunctional health care financing system.

That is the point. Tremendous efforts are made to reduce medical waste, without much progress being made, whereas this effort has been used almost as an excuse to avoid a program that would greatly improve health care value – an improved Medicare for all. We should keep making efforts to refine medical management, but let’s move on immediately with enacting a financing system that would reap tremendous rewards.

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Not being able to keep your health insurance under single payer

Posted by on Thursday, Nov 2, 2017

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.

One big thing people don’t know about single payer

By Drew Altman
Axios, November 2, 2017

It is generally assumed that the biggest obstacle to a national health plan like Medicare for All will be the large tax increase needed to pay for it. But new polling shows another challenge: Almost half of the American people don’t know that they would have to change their current health insurance arrangements if there was a single-payer plan.

Would switching to a single-payer system mean changing your health insurance?

Percent who think they could keep their current plan:

47% – Total
52% – Democrats
50% – Independents
44% – Republicans
44% – People with employer coverage

Why it matters: Current insurance plans leave a lot to be desired for many people, and it is entirely possible that some people would want to switch to a Medicare for All style plan. But the public has resisted being forced to change their health care in the past — don’t forget the uproar over the cancelled plans at the launch of the Affordable Care Act.

So requiring people to change could trigger blowback and would certainly provide a talking point to help opponents scare people about single payer.

The details: Overall, the general idea of a national health plan is pretty popular, with 53% of the American people favoring a national health plan — 30% strongly favoring it and 23% somewhat favoring it. On the other side, 31% strongly oppose it and 13% somewhat oppose it. Democrats and Republicans split on the idea, as expected.

But as the chart shows, somehow, 47% of the American people think they would be able to keep their current health insurance — even though a single payer Medicare for All style plan would do away with employer-based insurance.

Advocates of single payer consider it a virtue that employer-based health insurance would be eliminated. Health reformers on the right would also do away with employer-based insurance, but they would replace it with tax credits for private insurance, not a government plan.

There are also more targeted public insurance proposals for people who can’t get Medicaid or marketplace coverage — including a government-run public option, a Medicare buy-in for 50-64 year olds, or a Medicaid buy-in option on the ACA marketplaces. They wouldn’t threaten people’s current health care arrangements, but they are far from the rallying cry for some progressives Medicare for All may be, and they’re no slam dunks in the current political environment.

The bottom line: There is no sweeping health reform plan without tradeoffs, as we learned with both the ACA and the Republican repeal-and-replace plans. The fact that so many people don’t know that a national health plan would require them to change their insurance arrangements underscores the challenge of making the transition from a popular idea to a reality for a single-payer national health plan.…

A friend of mine from Switzerland explained to me the reason that the voters rejected single payer for their country. She said that most Swiss were quite satisfied with their current plans and did not want to risk replacing them with a single plan run by the government. Likewise, in the United States many are satisfied with their employer-sponsored plans and may be uncomfortable with the prospect of changing to a plan run by government bureaucrats.

It is not too difficult to explain why people would be better off with a well designed single payer program than they are under private health plans, whether individual or group. One of the more important considerations is the stability of a plan that provides coverage for life. Obviously employer-sponsored plans change every time there is a change in employment and whenever the employer decides to change the plan(s) offered. Choice of providers is limited by most plans today resulting in fragmentation of health care with changes in provider networks. Employer-sponsored plans have been declining in actuarial value primarily through increases in deductibles and other cost sharing. The PNHP single payer model eliminates cost sharing thus removing financial barriers to care and preventing financial hardship due to excessive out-of-pocket costs. Financing of single payer is more equitable since it is based on income rather than on a premium that may not be affordable for low- and moderate-income individuals and families. Portability of coverage is not a problem since everyone is covered everywhere at all times. The list goes on.

Some would be concerned about losing the employer contribution to the insurance premium if we were to switch to single payer. But most economists agree that the employers’ contribution is paid by forgone wage increases. The premium contribution would be replaced by equitable taxes, but it would depend on the tax policies put in place as to whether the employers’ contribution would be replaced with taxes on the employer, or would be advanced to the employees as salary or wage increases, or some of both. Also, the tax expenditures (deductibility) for employer-sponsored plans are regressive since higher income individuals receive a greater tax benefit than do those with lower incomes. Regardless, the funding of health care under single payer would be much more equitable than it is now.

Thus, objectively there is no contest. A single payer national health program – an improved Medicare for all – would be vastly superior to our current fragmented, dysfunctional financing system. But facts and objectivity may be inadequate for someone whose mind is made up, as anyone can attest to who has had a conversation with a passionate Trump supporter who refuses to concede on issues for which well documented facts refute their positions. People are like that, even people who do not support Trump.

This does demonstrate the importance of educating the public on single payer Medicare for all. But the principles have to be repeated so often that they become memes, and we will always have to contend with the opponent meme-sayers. Our advantage is that we do not waiver on the truth, and they do. Most people can eventually recognize the difference.

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Half of U.S. health care payments to be made through APMs

Posted by on Wednesday, Nov 1, 2017

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.

Learning & Action Network (LAN)

Our Mission: To accelerate the health care system’s transition to alternative payment models by combining the innovation, power, and reach of the public and private sectors.


SPEECH: Remarks by Administrator Seema Verma at the Health Care Payment Learning and Action Network (LAN) Fall Summit

Centers for Medicare and Medicaid Services, October 30, 2017

The LAN offers a unique and important opportunity for payors, providers, and other stakeholders to work with CMS – in partnership – to develop innovative approaches to improving our health care system. Since 2015, the LAN has focused on working to shift away from a fee-for-service system that rewards volume instead of quality. We support this move.

We all agree that quality measures are a critical component of paying for value. But we also understand that there is a financial cost as well as an opportunity cost to reporting measures. Until we get to a smaller set of more impactful measures that assess outcomes rather than processes, the burden associated with reporting measures will run the risk of outweighing their intended purpose. We understand the problem…we understand the frustration…and we understand that something needs to be done.

That’s why we’re revising current quality measures across all programs to ensure that measure sets are streamlined, outcomes-based, and meaningful to doctors and patients. This includes a review of the Hospital Star Rating program. And, we’re announcing today our new comprehensive initiative, “Meaningful Measures.”

“Meaningful Measures” takes a new approach to quality measures to reduce the burden of reporting on all providers. It draws on advice and input from the LAN as well as the National Academies of Medicine, the Core Quality Measures Collaborative, and the National Quality Forum. Continued input from the LAN will be critical in this effort.

Our vision is to develop models that promote a patient centered system of care within a market driven health care system. Models should empower consumers to make decisions that are right for them and providers should compete around value and quality. We want patients to be activated shoppers and need to make sure they have the information and the incentives to make decisions that are right for them.…


CMS announces new ‘Meaningful Measures’ initiative

By Greg Slabodkin
Health Data Management, October 30, 2017

The Centers for Medicare and Medicaid Services on Monday announced a new initiative intended to streamline quality measures, reduce regulatory burden and promote innovation in the healthcare industry as it transitions from fee-for-service to value-based payment.

The effort, called the Meaningful Measures initiative, is being described as a “new approach to quality measurement.” CMS Administrator Seema Verma made the announcement during a plenary session at the Health Care Payment Learning and Action Network (LAN) Fall Summit in Arlington, Va.

According to the agency, the Meaningful Measures initiative will “involve only assessing those core issues that are most vital to providing high-quality care and improving patient outcomes,” while adding that CMS “aims to focus on outcome-based measures going forward, as opposed to trying to micromanage processes.”

In her presentation on Monday at the LAN Fall Summit, Verma said that CMS is re-examining its “process for conducting quality measurement across the board,” such as implementing the Medicare Access and CHIP Reauthorization Act (MACRA) in a way that minimizes the burden and costs providers face in meeting the requirements.

Jeff Smith, vice president of public policy for the American Medical Informatics Association, was guarded in his assessment of new CMS initiative.

“The goals are laudable, but the talking points have been with us for several years now,” observed Smith. “Measurement depends on agreed-upon definitions of quality, and in an electronic environment, it requires access to and use of computable data. If CMS is going to turn these talking points into reality, it will need to put forth far more resources and commit additional experts to a complete overhaul of electronic quality measures for value-based payments.”…


U.S. Health Care System Ties 29% of Payments to Alternative Payment Models

Markets Insider, October 30, 2017

A report released today showed that 29% of total U.S. health care payments were tied to alternative payment models (APMs) in 2016 compared to 23% in 2015, an increase of six percentage points. The report was issued by the Health Care Payment Learning & Action Network (LAN), a public-private partnership launched in March 2015 to drive adoption and alignment of APMs. Payment reform plays a critical role in building a health care system that results in better accessibility, quality, affordability, empowerment, and innovation. Results were in line with the goals of the LAN to tie 30% of total U.S. health care payments to APMs by 2016 and 50% by 2018.

The report marks the second year of the LAN APM Measurement Effort, the largest and most comprehensive of its kind at the national level. The findings capture actual 2016 health care spending from four data sources: the LAN, America’s Health Insurance Plans (AHIP), the Blue Cross Blue Shield Association (BCBSA), and the Centers for Medicare and Medicaid Services (CMS) across commercial, Medicaid, Medicare Advantage, and fee-for-service (FFS) Medicare market segments, and categorize them according to the four categories of the original LAN APM Framework.

The LAN APM Measurement Effort determined the following results:

* 43% of health care dollars in Category 1 (e.g., traditional FFS or other legacy payments not linked to quality)

* 28% of health care dollars in Category 2 (e.g., pay-for-performance or care coordination fees)

* 29% of health care dollars in a composite of Categories 3 and 4 (e.g., shared savings, shared risk, bundled payments, or population-based payments)

Report findings show some interesting trends. First, there was a shift away from legacy FFS payments and a marked growth in Category 2, where payments are tied to value. Second, there was a six percentage point increase in alternative payment model payments (Category 3 and 4), bringing total APM spending to approximately $354.5 billion dollars nationally.

“We are encouraged by these results and the great progress being made towards APM adoption,” said Trent Haywood, Chief Medical Officer at the Blue Cross and Blue Shield Association. “These findings underscore the importance of the public and private sectors working in concert supporting providers towards APM adoption. We know that providers need information and support from health plans to take on risk. This Measurement Effort helps develop the rationale for continued payment reform, and we as health plans must continue to share information, clinical support and data on spending and quality to determine to encourage further progress.”…


CMS loses money as Medicare ACOs remain risk-averse

By Maria Castellucci
Modern Healthcare, October 31, 2017

The CMS’ Medicare shared savings program paid out more in bonuses to accountable care organizations than the savings those participants generated, as many were unprepared to take on downside risk, new federal data show.

About 56% of the 432 Medicare ACOs generated a total of $652 million in savings in 2016, according to the CMS dataset released last week. However, participant bonuses eclipsed those savings. The CMS paid $691 million in bonuses to ACOs, resulting in loss of $39 million from the program.

“Medicare isn’t saving money,” said David Muhlestein, chief research officer at Leavitt Partners.

That’s because 95% of the Medicare ACOs — or 410 — participated in Track 1 of the Medicare Shared Savings Program, which doesn’t require ACOs to take on any downside risk, so they aren’t on the hook for penalties if they miss their targets. Just 22 ACOs participated in advanced tracks — Track 2 or Track 3 — with downside risk. In those tracks, the ACO must pay back any losses to the CMS.

ACOs continue to shy away from downside because it’s difficult to prepare for. To participate in Tracks 2 or 3, the ACO must show the CMS it has extra capital on hand to pay losses if it misses performance targets.

Acquiring the extra capital is no easy feat, said Allison Brennan, vice president of policy at the National Association of ACOs. Typically, organizations spend millions of dollars to establish an ACO. The organizations usually have to build data analytics tools, enhance information technology and hire care coordinators and additional staff to oversee the venture.

These investments make it challenging for ACOs to free up any extra capital to take on downside risk, Brennan said.…


Value of CMS’ voluntary bundled-payment program remains unclear

By Virgil Dickson
Modern Healthcare, October 31, 2017

For the third consecutive year, researchers cannot determine whether a voluntary Medicare bundled-pay initiative actually cut costs and improved care.

In a CMS-funded analysis released Oct. 26, the Lewin Group said providers were starting to reap the benefits of the Bundled Payments for Care Improvement initiative, but it’s still unclear whether the savings and improved quality actually stemmed from the program.

“Because we are measuring multiple outcomes across the range of model, participant, and episode combinations, by chance alone some results will appear significant, although in reality, they are not true effects of the initiative,” the report stated.

The results are disappointing, as BPCI is one of the longest-running programs to transition Medicare from a fee-for-service system to one that focuses on value and quality.

“We still don’t know the answer to whether bundled payments improve care,” said James Scott, CEO of Applied Policy, a reimbursement consulting firm.…


Survey: Only 1 in 4 providers strongly agree EHRs prepared them for new healthcare economy

By Julie Spitzer
Becker’s Health IT & CIO Review, October 30, 2017

PwC’s Health Research Institute surveyed 300 healthcare provider executives working at for-profit, nonprofit and government-owned facilities on their experience implementing and using EHRs.

While 31 percent of providers said their organization moved to an EHR as part of a broader business strategy, 69 percent said they did so to meet CMS’ meaningful use requirements.

Just 23 percent of providers strongly agree EHRs have helped their organization’s population health and value-based care strategies.…l

PwC Health Research Institute Spotlight; EHRs in the New Health Economy: Essential but insufficient…


Clarity on 2017 MIPS: 4 things physicians must do to participate

By Andis Robeznieks
AMA Wire, October 31, 2017

At this point, there are two big items that should be on physicians’ to-do list regarding their 2017 obligations for the new Medicare Merit-based Payment System (MIPS): Verify that they that they are on the right path for their goals for the program; and, if not, take advantage of the “one patient, one measure” reporting option to avoid a 4 percent payment penalty in 2019.

For physicians who have not collected quality-measure data, are confused by the whole MIPS process, or who are just preparing for more active participation in 2018, the minimum reporting option may be the best course of action to take. The AMA “One Patient, One Measure, No Penalty” tutorial offers a step-by-step guide to complete the minimum-reporting process and help physicians avoid a 4 percent Medicare payment penalty for 2019.…

The mission of the Learning & Action Network (LAN) is to “accelerate the health care system’s transition to alternative payment models.” In endorsing this concept CMS Administrator Seema Verma uses the rhetoric of “rewarding quality instead of volume” and advancing her vision of “a market driven health care system.” In doing so she introduces the rhetorical concept of “Meaningful Measures.”

The LAN report has shown that there has been an explosion in the growth of alternative payment models (APMs), yes, the APMs called for in MACRA (the SGR replacement). Yet, as typified by the accountable care organizations (ACOs) and the Bundled Payments for Care Improvement program (BPCI), the APMs are not delivering. Even electronic health records (EHRs) were driven more by “meaningful use requirements” rather than population health and value-based care.

The health care reform process has been and continues to be driven by rhetoric, heavily tinged by ideology, without much substance. For years, we’ve been exposed to talking points, but the health care system remains in a quagmire because of the lack of much needed infrastructure changes such as those of a well designed single payer system.

You might want to read Seema Verma’s full speech – beautiful rhetoric calling for freeing us from regulatory burdens while empowering consumers (patients) to “make decisions that are right for them” while “providers compete around quality and value.” Oh, and if you have any idea on how to accomplish that, she invites your input.

Trent Haywood, Chief Medical Officer at the Blue Cross and Blue Shield Association seems to understand what it is all about. “We as health plans must continue to share information, clinical support and data on spending and quality to determine to encourage further progress.” It is a portal to sell us more administrative services – a whole lot more.

In the meantime, physicians will face a 4 percent Medicare payment penalty for 2019 if they do not meet the MACRA requirements – a program designed to herd physicians into APMs. Physicians have the option this year of complying with MACRA through MIPS (Merit-based Incentive Payment System) by providing one measure on one patient, and that will allow them to avoid the penalty. That solution must have been quite an intellectual challenge for the policy community.

The LAN goal is to have half of all health care payments through APMs next year even though they do not seem to be working, and they really don’t even seem to understand what they are (thus the “one patient, one measure” escape).

The policy community says that we single payer advocates need to start answering questions about our proposals. Well, we do have the answers in the form of very specific policy proposals. Maybe instead they should provide us with answers about their alternative payment models which will cover half of health care spending next year in spite of the fact that they don’t work, and they don’t even seem to understand just what the heck they are.

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Kathleen Sebelius and Bill Frist digging for the Medicare Advantage gold

Posted by on Tuesday, Oct 31, 2017

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.

​The newest Medicare startup

By Sam Baker
Axios Vitals, October 24, 2017

Keep this on your radar: My colleague Bob Herman reports Devoted Health, a new insurance company that will only sell Medicare Advantage plans, just raised $62 million, according a new financial disclosure. The startup will start selling Medicare Advantage plans in 2019.

The players: Some big names are backing Devoted Health: Former HHS Secretary Kathleen Sebelius and former Senate Majority Leader Bill Frist are on the board. Todd and Ed Park, brothers who both worked at electronic health record and billing company athenahealth, are the co-founders; they also recruited Venrock’s Bob Kocher as chief medical officer.

Get smart: Medicare Advantage is where the big money is. The ACA marketplaces grab a lot of headlines, but they are a blip on the radar when compared with the hundreds of billions of dollars tied up in private Medicare plans and care for seniors.…

Devoted Health:…

“Medicare Advantage is where the big money is,” and Former HHS Secretary Kathleen Sebelius and former Senate Majority Leader Bill Frist are going for it. Our trusted public servants have led us down the path of privatization of Medicare by way of the private, for-profit Medicare Advantage plans. Now that they have left government, the payoff awaits them.

When we could have a vastly superior publicly-financed and publicly-administered improved Medicare for all, why do we continue to tolerate this? Satisfying the greed of the few takes precedence over ensuring the health of all of us? Where are our values in all of this?

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The Democratic Party, as is the case with the Republican Party, has its own civil war going on as it looks to the upcoming election cycles in 2018 and 2020. Its division over how to proceed on health care shows how wide the divide is among Democrats.

Democratic centrists, so involved in defending the Affordable Care Act (ACA) against the Republicans, are riding high on their success so far in avoiding its repeal, but shouldn’t take too much of a victory lap since the GOP has no replacement plan, especially after more than seven years. Meanwhile, the centrists are pushing aside the efforts of progressive Democrats to place universal health care through single-payer Medicare for All on the party platform. This continuing wide gulf across the Democrats’ political spectrum will delay real health care reform, weaken their impact on health care, and could easily lead to losses by Democrats in the upcoming elections. (Full Story at BuzzFlash).

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Bernie Sanders in Canada

Posted by on Tuesday, Oct 31, 2017

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.

Bernie Sanders compares U.S. health-care struggles to rights movements

By Theresa Boyle and Alex McKeen, October 29, 2017

American Senator Bernie Sanders says insurance and drug companies, and those with extreme wealth, are hurting health care in the United States and warned Canadians not to allow that to happen on this side of the border.

“It is a shame, it is a disgrace,” he said in a speech in Toronto on Sunday, explaining that 28 million Americans do not have health insurance and that the current U.S. government wants to drop public coverage for millions more to pay for tax cuts for the most wealthy.

The independent senator from Vermont received four standing ovations from a crowd of about 1,500 at the University of Toronto’s Convocation Hall as he described his crusade to reform health care in his country.


The following link includes a video of Bernie Sanders’ presentation plus an introduction by Ontario Premier Kathleen Wynne and an interview of him by Danielle Martin. (The video is labeled “WATCH LIVE.” Since the opening quartet did not record satisfactorily, advance to 18:00 for the start.)…

This video provides a pleasant break from our somber reform activities since it demonstrates the passion of the people of a nation who really care about their health care system and are so pleased to see that someone south of their border cares as well: Bernie “Tommy Douglas” Sanders.

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Physicians for a National Health Program's blog serves to facilitate communication among physicians and the public. The views presented on this blog are those of the individual authors and do not necessarily represent the views of PNHP.

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