By Noam N. Levey
Kaiser Health News, March 24, 2021

When Democrats pushed through a two-year expansion of the Affordable Care Act in the covid-relief bill this month, many people celebrated the part that will make health insurance more affordable for more Americans.

But health care researchers consider this move a short-term fix for a long-term crisis, one that avoids confronting an uncomfortable truth: The only clear path to expanding health insurance remains yet more government subsidies for commercial health plans, which are the most costly form of coverage.

The reliance on private plans — a hard-fought compromise in the 2010 health law that was designed to win over industry — already costs taxpayers tens of billions of dollars each year, as the federal government picks up a share of the insurance premiums for about 9 million Americans.

The ACA’s price tag will now rise higher because of the recently enacted $1.9 trillion covid relief bill. The legislation will direct some $20 billion more to insurance companies by making larger premium subsidies available to consumers who buy qualified plans.

And if Democrats want to continue the aid beyond 2022, when the relief bill’s added assistance runs out, the tab is sure to balloon further.

“The expansion of coverage is the path of least resistance,” said Paul Starr, a Princeton University sociologist and leading authority on the history of U.S. health care who has termed this dynamic a “health policy trap.”

“Insurers don’t have much to lose. Hospitals don’t have much to lose. Pharmaceutical companies don’t have much to lose,” Starr observed. “But the result is you end up adding on to an incredibly expensive system.”

The large new government commitment underscores the disparity between the high price of private health insurance and lower-cost government plans such as Medicare and Medicaid.

The main reason commercial health plans cost more and saddle patients with higher medical bills is because they typically pay hospitals, doctors and other medical providers more than public programs such as Medicaid.

https://khn.org…

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Comment:

By Don McCanne, M.D.

This article makes an important point. President Biden and his staff, along with Congress, chose the most expensive method of expanding health care – giving more taxpayer funds to the private insurers. There is a bit of sleight of hand here since it is us – the taxpayers – who are paying these higher prices for a health care financing system heavily dependent on private insurers.

Why are costs higher when we use private insurers? The author indicates that private commercial insurers pay more for health care services than government programs, and, by and large, that is correct. But that is a relatively small portion of the higher spending by private insurance, and it does not take into consideration that public programs are more effective at setting appropriate prices – costs plus fair margins – not to mention that they use more efficient financing methods such as global budgeting of hospitals.

But what has been ignored in this article is the major reason that private insurers are more expensive, and that is administrative costs. Those extra taxpayer funds going to private insurers include costs such as marketing of their plans, costs of contracting for restrictive provider networks, administering prior authorization requirements, complex systems of processing claims including denial of benefits, simple administrative costs of operating large corporate entities, and distributing generous profits to their executives and passive investors. Which of these administrative services do you want to continue to pay for through increased taxes?

So these increased costs that the taxpayers are bearing are not just for more health care, but they are a gift to the most expensive and inefficient financing system on earth. Particularly galling is the fact that the administration is presenting this as if it were a gift from the government to the patients, but that government money is provided by us – the taxpayers. Much of it is hidden from view since a large portion of these taxes we pay are disassociated from health care spending. Keep in mind that funds moved into the health care financing system are not available for other important needs such as food, housing, transportation, education, environment, infrastructure, and so on.

A single payer Medicare for All program would fill in our health care financing needs without wasting the hundreds of billions of dollars on these superfluous administrative costs of the private insurers, plus their profits. But they are now talking about making these wasteful expenditures permanent. Maybe they might even add a public option, which would be only one more player in our profoundly inefficient system.

As the title of Noam Levey’s article indicates, the big boost was in buying health insurance rather than simply health care, and it didn’t come cheap. As Paul Starr states, we ended up adding on to an incredibly expensive system. We didn’t have to do that. We can still redirect our course toward an efficient, equitable system for all. After all, it’s our money, and yet progressive taxation makes health care affordable for all since it is simply based on the ability to pay. That is certainly more efficient than playing games with taxpayer subsidies for premiums and cost sharing for expensive, self-serving private insurers.

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By Joyce Frieden
MedPage Today, March 23, 2021

“All over this country, the American people are asking a simple question: How many people need to die before Congress is prepared to take on the greed of the pharmaceutical industry?” Sen. Bernie Sanders (I-Vt.), chairman of the Senate Health, Education, Labor & Pensions (HELP) Subcommittee on Primary Health and Retirement Security, said during a subcommittee hearing Tuesday on the high price of prescription drugs.

As to what Congress should legislate, Sanders had three ideas, embodied in bills he had introduced: Pegging U.S. drug prices to those of other industrialized countries; allowing for reimportation of prescription drugs from other countries; and allowing Medicare to negotiate drug prices. “Every other major country on earth … negotiates drug prices, and the time is long overdue for Medicare to do that as well,” he said.

https://www.medpagetoday.com…

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“Why Does the US Pay the Highest Prices in the World for Prescription Drugs?”: Testimony of Dr Nav Persaud, Canada Research Chair in Health Justice and Associate Professor, University of Toronto

United States Senate Subcommittee on Primary Health and Retirement Security, March 23, 2021

Canada regulates the price of patented medicines and pays less for the same medicines

In Canada, per capita drug spending is $879 versus over $1,229 in the United States. Per capita drug spending is about 40 % higher in the United States largely because of the regulation of patented drug prices by the Canadian Patented Medicine Prices Review Board.

Posted prices for patented medicines are approximately 3 times lower in Canada. The Patented Medicines Prices Review Board is slated, in July, to drop the United States from its list of comparator countries used to set “price ceilings”, because prices are shockingly high in the United States compared with other high‐income countries including the United Kingdom.

Change is possible with political will

Pressure and lobbying by the pharmaceutical companies (and private insurers) have undermined reforms in both Canada and the United States. Multiple government reports over decades have recommended including medicines in Canada’s public single‐payer system to improve fair access and to save billions each year.vii But this has not happened, so we continue to pay higher prices than comparable countries such as New Zealand and Australia and inequities persist. America is a superpower that has not shown its strength in standing up to pharmaceutical companies that rip off Americans, as proven by the price differences for patented medicines across our border.

Three ways America – the superpower – can lower drug prices

1. Punish abusive pricing of patented medicines by creating a new Bureau. Create a new Bureau to set price ceilings for patented medicines, give that Bureau the resources and teeth to keep prices low, and empower that Bureau to issue compulsory licences when companies price patented medicines unreasonably. The new Bureau should be able to cut annual drug spending by at least $100 billion.
2. Use negotiating power and open tendering processes to secure low prices on a defined set of essential medicines as per international guidance. Negotiating power can help to ensure equitable access to needed medicines including off‐ patent or generic medicines.
3. Use existing legislation, and additional political will, to discipline the companies currently bloated by high medicine prices that illegally market products. There is a need for urgent action – Americans are getting ripped off by more than $100 billion each year and, in the wrong hands, this money is used to illegally market medicines in ways that kill Americans.

While some get rich, others die. Cost‐related non‐adherence to medicines – not taking pills as instructed due to the cost – is more common in Canada (8%) and the United States (17 %) than in comparable high‐income countries where it is typically below 5 %. The Centers for Disease Control and Prevention estimated that all‐cause mortality was 15 % to 22 % higher among Americans with chronic diseases such as diabetes who cannot afford their medicines compared with those who could afford them. Drug pricing is a life and death issue.

https://www.help.senate.gov…

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Comment:

By Don McCanne, M.D.

We often look to Canada as a possible source of lower-priced pharmaceuticals. But Canada – a nation with one-tenth of our population – can hardly serve as the source of our medications that is ten times their own need. Besides, Canada continues to struggle with its need for a Pharmacare program to serve its own people. But that does not mean that they do not have good advice for us.

I happened to have been prescribed recently a long-term medication that is priced at over $500 per month. Although I have insurance under Part D Medicare, it was designed by conservatives to be certain that the patient bears a significant portion of the costs. So I am one of those made to “feel the pain” so that maybe I’ll decline this important and perhaps life-saving medication. (Just a small example of the difference between conservative and progressive health policies – individual responsibility versus collective social good wherein individuals frequently do not have the same negotiating leverage as would our government working for us all, while still providing the medical-industrial complex with fair margins.)

The solution is simple. The United States government needs to use its negotiating power in the purchase of drugs. As part of a single payer Medicare for All, everyone could have the drugs they need in a system that is affordable for all.

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By Margot Sanger-Katz and Sarah Kliff
The New York Times, March 22, 2021

The new stimulus bill made tens of millions of Americans eligible for new health insurance subsidies. But many will have to wait to get help: It will probably take a year for the full emergency aid to reach people, because of website complications and other logistical problems.

The health law’s complex structure makes it hard to retool insurance subsidies, let alone create a new program for the unemployed. The systems that distribute the benefits depend on government coders who update websites, and marketers who help people understand the new programs and jump through various administrative hoops to collect them.

Getting those lower prices will require work: Americans who already have Obamacare insurance will have to go back to the website where they bought their insurance; make sure they don’t want to switch plans; and certify that they want the new, expanded tax credits. Those who fail to do this will keep paying their current price. They should eventually receive the additional funds as a large refund with their 2021 taxes next spring.

People who have bought their own insurance elsewhere will need to cancel their current plan and switch to an eligible one.

Another key part of the stimulus provides free health plans with a generous set of benefits to Americans who received unemployment insurance this year. Even though the coverage will be retroactive to Jan. 1, the new benefit will take months to set up, and won’t appear on Healthcare.gov until this summer. That timeline may require people to visit Healthcare.gov as many as three times: once to sign up for a plan, then to get the new income-based subsidies, and again to get the special unemployment benefit once it’s ready.

The slow rollout of government aid is partly the result of the technological challenge of updating Healthcare.gov, which is connected to a maze of federal systems to verify people’s residency, income and insurance choices.

The slowness also reflects a policy debate within the administration about how automatic the new benefits should become.

If the Biden administration automatically increases people’s tax credits, some people could face a higher risk of a large tax bill.

Research suggests that the more complex social welfare programs are to access, the more likely it is that eligible people will fall through the cracks.

Although the stimulus bill passed with overwhelming Democratic support in Congress, a substantial share of Democratic lawmakers would prefer a simpler, more universal path to wider health coverage. This month a majority of House Democrats co-sponsored a bill to create a “Medicare for all” system, which would automatically provide government health insurance to all Americans, without the current system of subsidies and signups.

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

Many are celebrating the increase in health care benefits included in the stimulus bill. Improving coverage is a good thing, but how much do we have to celebrate here? First of all, many will be left uninsured or underinsured. Structural defects such as the profound administrative excesses will be perpetuated or even increased. Much of the program is temporary and thus won’t provide long term solutions. Some will have disruptions of their current programs plus further disruptions when the programs sunset.

Many potential tweaks discussed during the presidential campaign have not been included, so some are hoping that these may be enacted in the future along with making some of the temporary changes permanent. If so, most defects in our current system will remain in place. Also, efforts to make the system universal, equitable, affordable and inefficient will cease, as Congress and the administration move on to other pressing issues.

It is sad because we already have pending legislation that would fix these problems on a permanent basis: H.R.1976 – the single payer Medicare for All bill. Why would we want to continue with the complexities and deficiencies of the current approach when we can have it all now by enacting and implementing Medicare for All?

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By Jane M. Zhu, M.D., M.P.P., M.S.H.P., and Daniel Polsky, Ph.D., M.P.P.
The New England Journal of Medicine, March 18, 2021

The ecosystem of physician-owned medical practices has been inundated with larger forces that are driving health care toward consolidation, corporatization, and administrative management. Between July 2016 and January 2018, hospitals and health systems acquired more than 8000 practices, a process that was shepherded by regulatory shifts, changes in payment and delivery models, and uncertainty in the health care market. Roughly 14,000 physicians left private practice to become hospital-affiliated employees. These structural changes have shifted competitive dynamics for medical practices in two principal ways. First, remaining independent practices must now compete against much larger entities, which benefit from economies of scale. Second, to remain competitive, independent practices increasingly require new sources of capital. During the Covid-19 pandemic, revenue losses for many smaller practices have magnified financial pressures. Amid these changes, private-equity firms have emerged as influential players, offering a lifeline to smaller groups needing a competitive edge in a consolidating market. The rapid growth of private-equity investment throughout medical specialties has generated intense interest in potential adverse effects on physicians and patients.

Private-equity firms offer practices an alternative source of investment capital outside public ownership and distinct from hospitals and health systems, principally by allowing physicians to continue to hold equity and benefit financially from future transactions. To yield annual returns exceeding 20% on a typical investment horizon of 3 to 7 years, private-equity firms generally use a combination of expansion, establishment of new lines of business, and restructuring. For investments in physician practices, one core strategy involves acquiring and scaling up “platform” practices — usually established, brand-name companies with market reach and a good clinical reputation — before selling the practice to a larger investor.

Some of the value created by private-equity firms may be viewed in the context of a zero-sum game — one that results in winners and losers in an ecosystem serving a finite number of patients. A platform practice may roll up an entire portfolio of small practices, including regional competitors and practices in its referral networks, to be able to redirect more referrals to internal clinicians and increase its market share. Although this approach creates value for the growing practice, it may reduce competition and result in loss of patients and revenue for other practices. Acquired practices may also leverage market power in negotiations with insurers, which can lead to higher margins for the practice and potentially higher costs for patients and payers.

As in any ecosystem, however, the introduction of new forces can have unintended and undesirable consequences. An important concern is that private-equity firms’ goal of maximizing short- to medium-term profits may place undue pressure on physicians. Although a sale to a private-equity firm may yield an up-front lump sum for practice partners, changes in physician-compensation structures and professional autonomy may substantially alter performance incentives, practice conditions, career prospects, and job satisfaction, particularly for younger physicians. Each subsequent sale — to other private-equity firms, health services groups such as Optum, or large health systems — may further chip away at clinical autonomy and introduce new management influences.

From a societal standpoint, the net effect of private-equity investments in physician practices on downstream costs, value, and quality of care is unclear. The experiences of some private-equity–backed clinics suggest that there is pressure to expand certain revenue streams by conducting more elective procedures and providing more ancillary services, and to engage in “upcharging.” Practices acquired by private-equity firms may also be given incentives to prioritize care for commercially insured patients to maximize reimbursement; to deliver more streamlined, low-complexity care (e.g., perform more skin biopsies or screening colonoscopies) rather than meeting complex care needs; or to situate new offices in higher-income communities instead of in socioeconomically disadvantaged ones. These possibilities raise important questions about the implications of such investments for health equity and larger health system goals.

All states should have a comprehensive corporate practice of medicine doctrine, which prohibits medical management companies from exerting control over clinical judgment and practice. Nearly 20 states don’t have such a rule, and those that do vary substantially in the types of financial and contractual arrangements that they permit. As a result, private-equity firms frequently exploit loopholes, such as by structuring a parent company to have financial control of a practice while naming the physicians as owners.

Physicians should be aware that private equity’s growth is emblematic of broader disruptions in the physician-practice ecosystem and is a symptom of medicine’s transformation into a corporate enterprise. For some practices, outside investment may help facilitate growth and extend a lifeline that allows them to compete with larger players in an increasingly consolidated market. But this trend may also contribute to practices getting squeezed. As more investors enter health care and drive value creation, it’s worth considering for whom value is being created. How physicians respond — and the extent to which they retain core values in the service of patients — will ultimately determine the ecosystem’s resilience in the face of stressors.

https://www.nejm.org…

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Comment:

By Don McCanne, M.D.

Private equity takeover of medical practices is here, and the momentum may change medicine forever. The business community may think that the changes taking place are beneficial, but traditional professional values are being buried under private equity’s steam roller.

Private capital is certainly playing a major role here. Stepping back and looking at what is happening can’t help but make you wonder if maybe public capital should be taking over that role. Maybe instead of looking up north to Canada, we should be looking across the sea to the United Kingdom. Rereading this article while substituting the term “National Health Service” for “private equity” would require substitution of the more nefarious consequences that are distributed throughout this article. We are now decades into the unsuccessful quest for a single payer version of an improved Medicare for All, and private capital seems to be making that goal more elusive.

If nothing else, perhaps discussion of a National Health Service might scare the opponents into considering a single payer system. But then it might be too late. The disruption required could be an almost insurmountable hurdle to overcome. Better take a closer look at H.R.1976 – “To establish an improved Medicare for All national health insurance program.” Its passage could not be more urgent.

https://www.congress.gov…

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Families USA, March 17, 2021

The realities of the COVID-19 pandemic have made health and health care reform front burner issues for all of us, no matter our political party, race, location, or background

No one in this country should have to worry that they can’t afford the health care they need or have to choose between filling a prescription and paying rent or a mortgage. Families across America agree—and they want to see action.

That’s according to new polling from Families USA and Hart Research Associates. The nationwide, online poll of more than 1,600 voters (fielded January 27 to February 1, 2021) underscores how COVID-19 has made health and health care reform a priority issue for people in America, regardless of political affiliation, race, location, or background. A strong majority of voters—Republican, Democrat, or Independent—want to see real health care solutions this year, particularly around health care costs and prescription drug prices.

As the Biden administration and Congress consider new policies to best serve their constituents, the poll indicates that voters in America are looking for:

• Meaningful results on health care this year. When asked what they want President Biden and Congress to focus on this year, voters indicated that health care is a top-of-mind priority, along with COVID-19 and the economy. Three in four voters say health care should be a high priority for President Biden and Congress this year, including a strong majority of Democrats (91%), independents (75%), and Republicans (58%). These findings hold true across racial, geographic, and gender differences.
• Strong action to address excessive health care costs, particularly for prescription drugs and insurance premiums. More than eight in ten voters believe that the health care system today works more for the benefit of the insurance and drug industries than the average person—and this sentiment holds true across demographic groups and partisan lines. Roughly nine in ten voters say that it is important for Congress and the president to take action to lower prescription drug prices and health care costs this year.
• Real solutions that solve health care problems rather than just making tweaks around the edges. Voters are concerned that Congress will not go far enough to make necessary changes to the health care system. In fact, this concern is much greater than any fear that Congress will go too far. Voters are particularly worried about lack of action in addressing the cost of prescription drugs; 67% are concerned that Congress will not go far enough to bring down prices. Majorities of Democrats, independents, and Republicans hold this opinion.

This year, we have a unique opportunity to finally give people peace of mind as we tackle the COVID-19 pandemic and address concerns that so many share. Now is the moment to deliver what people in America want most: lower health care prices and a healthy and secure future.

https://familiesusa.org…

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Comment:

By Don McCanne, M.D.

The history of Families USA and Physicians for a National Health Program dates back to the Clinton administration effort to expand health care to everyone. When Bill Clinton was offered the choice of a market of private health plans or a single payer national health program, he chose the former – the plan of Families USA. Anyone around then certainly remembers that failure.

Later, “President Barack Obama credited Families USA with playing an instrumental role in promoting the enactment of the ACA and for the organization’s work helping to implement and protect the historic health legislation.” (Wikipedia)

But after a decade of ACA, we still have serious deficiencies in our health care financing system: tens of millions uninsured, tens of millions underinsured with excessive out-of-pocket cost sharing, narrow provider networks that limit choices in health care, high prices, diversion of health care dollars to passive investors, inequity in access to health care, and profoundly excessive administrative services which have made us the most expensive system on earth, in spite of all its deficiencies.

What do people want? The recent polling from Families USA and Hart Research Associates shows that people want affordable health care and affordable prescription drugs, and they want action now. Three-fourths of voters say that health reform should be a high priority this year: 91% of Democrats, 75% of independents, and 58% of Republicans. Support holds across racial, geographic, and gender differences.

Over 80% of voters across various demographic groups and political preferences believe that the health care system today works more for the benefit of the insurance and drug industries than the average person. Voters are concerned that Congress will not go far enough to make changes to the heath care system, outweighing their concern that Congress might go too far.

Families USA has had a quarter of a century to prove that the private insurance market should be the primary source of health care financing in the United States. Based on the wishes of American voters, that model has woefully failed. Even their own poll indicates that people want the system fixed now, and not by the private insurance industry.

A quarter of a century ago, President Clinton said that the single payer model was the better plan but that he was going to go with Ron Pollack’s Families USA private insurance market plan. That was clearly a mistake. President Obama’s tweaks were somewhat beneficial but again fell far short because he left the private insurers in place in the financing infrastructure. President Biden and Congress now have the chance to rectify those errors by enacting and implementing a single payer system of Medicare for All. But we cannot allow the wishes of America to be hidden in a poll. We need to raise our voices in a deafening roar that will be heard throughout the nation, and especially in the White House.

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By Rachel M. Werner, M.D., Ph.D., Ezekiel Emanuel, M.D., Ph.D., Hoangmai H. Pham, M.D., M.P.H., Amol S. Navathe, M.D., Ph.D.
Penn, Leonard Davis Institute of Health Economics, February 2021

Executive Summary

A decade after the passage of the Affordable Care Act, the vision of moving the U.S. health care system “from volume to value” has been partially realized, with few value-based payment initiatives systematically reducing spending or improving quality. While participation in value-based payments continues to grow, the adoption of advanced forms of value-based payment through alternative payment models lags behind both the goals set by the Secretary of Health and Human Services in 2015 and the threshold required for widespread practice transformation. Furthermore, the complexity of the current suite of alternative payment models and allure of traditional fee-for-service prevent the widespread adoption of full risk-bearing contracts. The high costs of care with the impending insolvency of the Medicare trust fund, persistence of poor quality of care and health disparities along racial and socioeconomic lines, and mixed success of alternative payment models indicate the need for a revamped vision for the 2020s.

The 2020s require a new strategy that moves from a short-term focus on testing new payment models to a long-term focus on expanding models that are most likely to generate substantial savings and improve quality. This white paper outlines a new direction for the federal government — primarily through the Centers for Medicare and Medicaid Services (CMS) — to chart over the next decade aimed at completing the transition to a health care system that pays for value and reduced health disparities, rather than high volumes of services.

First, CMS must articulate a clear vision for the future of value-based payment. In particular, the vision must align across all publicly financed health care, driving change beyond Medicare and Medicaid. Second, CMS must dramatically simplify the current value-based payment landscape and engage late-adopting providers. Third, for health systems already participating in value-based payment, CMS must accelerate the movement from upside-only shared savings to risk-bearing, population-based alternative payment models while curtailing the ability of providers to opt out of value-based payment altogether. Fourth, CMS must not only pull providers toward advanced alternative payment models, but also structure incentives to push providers away from fee-for-service payment. Finally, achieving health equity must be a central feature and goal of value-based payment. Taken together, these five recommendations provide a path toward widespread adoption and success of alternative payment models, producing better health outcomes for all Americans, reducing wasteful inefficiencies and health disparities, and more effectively stewarding taxpayer funds to support other national priorities.

From the Introduction

A Decade of Movement from Volume to Value

Since the passage of the Affordable Care Act (ACA) in 2010, the Centers for Medicare and Medicaid Services (CMS) has sought to transform U.S. health care from a system that incentivizes volume to one that rewards value. A key part of this strategy has been shifting from fee-for-service (FFS) payment to mechanisms that link provider reimbursement to improved quality and reduced costs. In 2015, Health and Human Services (HHS) Secretary Sylvia Burwell publicly committed CMS to tying at least 90% of traditional Medicare fee-for-service payments to quality by 2018.

However, simply adding bonuses and penalties to fee-for-service payments is not enough to transform a system with historically high prices and inefficient care processes. Therefore, CMS has also developed advanced alternative payment models (APMs) that hold providers financially accountable for the quality and cost of care delivered to patients. These APMs include accountable care organizations (ACOs), episode-based payment models, Comprehensive Primary Care models, and other arrangements. Beyond committing to tying 90% of traditional Medicare fee-for-service payments to quality, CMS also sought to have at least half of payments flowing through APMs by 2018. According to the latest available data, while CMS has successfully tied 90% of payments to value, only about 40% flowed through APMs.

However, the transition to a health care system that rewards value has slowed in recent years, and the promise of curtailing health care spending while also improving quality has remained elusive.

Where We Are Now: Efficacy of Value-Based Payment and Health Disparities

The past decade of experimentation with APMs has had successes and failures. But it has provided proof-of-concept that if designed well, APMs are capable of driving cost savings and value improvements. There have been notable successes with the more advanced models that shift greater accountability onto providers, particularly those that do so over longer time horizons. Critics of value-based payment argue the movement is largely a disappointment, with only a small number reducing costs for Medicare, and many generating substantial losses. Observers are right to note that the current APM landscape includes many underperforming models, which have failed to produce the desired practice transformation. However, a decade of middling results does not imply that CMS should abandon value-based payment. The decade of experimentation has produced the necessary knowledge to design and implement APMs to transform health care delivery. We must build upon the most successful APMs and phase out those that have not delivered on their promise.

Conclusion

In the decade since the passage of the Affordable Care Act, the health care system has reached a series of important milestones in its shift to paying for value. Led by CMS, a growing share of payers have moved away from outmoded fee-for-service payment. More providers than ever before are engaged in some form of quality-linked payment, and a smaller cadre have begun experimenting with advanced forms of population-based payment and large-scale practice transformation.

We now need a more focused, whole-of-government push toward a high-quality, efficient system. The persistence of health disparities, uneven quality, and continued rise of health care costs, and the concomitant threat to federal and state budgets, requires renewed focus on spreading the adoption of advanced forms of alternative payment models. These models must move from experimentation to an entrenched, nationwide standard.

The past decade of experimentation shows that alternative payment models as currently implemented are not driving large-scale, systemic change. But a careful study of the lessons from both successful and underperforming models suggests that properly designed APMs can yield improvements in value through cost reductions and quality improvements. The next decade must put those lessons into practice by engaging late adopters, ramping up already adopted and successful APMs, driving payment and practice transformation in commercial insurance, and integrating equity front and center in value-based payment. The goal of a sustainable health care system that pays for better quality, equity, and efficiency is both audacious and fully achievable.

https://ldi.upenn.edu…

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Report to the Congress: Medicare Payment Policy

MedPAC, March 2021

One way traditional FFS Medicare has attempted to slow the growth in its spending is through alternative payment models (APMs). APMs are intended to give providers financial incentives to deliver care efficiently, to counteract FFS payment systems’ incentives to maximize the volume of services provided.

Most APMs are piloted in different parts of the country for three to six years at a time. Models are evaluated by researchers, and CMS uses findings from these evaluations to develop successor APMs that build on lessons learned. CMS is allowed to make permanent any APMs that save Medicare money while maintaining quality or that improve quality without increasing spending. Evidence analyzing the impact of APMs is still emerging, and APM impacts, even when positive, have been modest. Some types of APMs (population-based models and episode-based payment models for some conditions) have performed better than others. Despite modest effects to date, the Commission believes APMs hold great promise and is currently exploring potential improvements to APMs that could increase their success rate.

MedPAC report to Congress – over 500 pages:
http://www.medpac.gov…

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Comment:

By Don McCanne, M.D.

For about a decade now we’ve been fixated on paying for value instead of volume. But what does that mean? All health care has “volume” – time, effort and resources devoted to health care. Volume varies tremendously depending on the clinical situation. Think of management of a common cold as opposed to management of severe multiple injuries in an accident. Can payment schemes ignore volume? Of course not. Volume is built into the problem.

What about value? It seems to be defined as cost reductions and quality improvements. When you are trying to provide optimal care, is cost what you are really looking at? Just as you are not looking at increased volume to increase costs, you are also not looking at reduced volume to reduce costs. You are looking at what is best for the patient. And quality? Quality is important. Striving for excellence in care is always a goal. But the few quality measures used today hardly reflect overall excellence in care. They represent a minuscule portion of care delivered and, at that, they are crafted in a manner that they can easily be gamed.

Yet “value instead volume” has led to accountable care organizations (ACOs) and other alternative payment models (APMs), and has led to complexity in medical record systems that is contributing to burnout of health professionals. Experimentation over the past decade has led to conclusions such as “the promise of curtailing health care spending while also improving quality has remained elusive” (Penn), or “APM impacts, even when positive, have been modest” (MedPAC). To date, this experimentation has been largely a failure.

The policy community is claiming that we can learn from the experiments of the past decade and that we must move forward with these models by not only pulling providers towards APMs but also pushing them away from fee-for-service payment (Penn). Do not pay them for the services they provide, but pay them for “value,” even if there is no satisfactory model of measuring value, whatever it is.

They express confidence that, with concerted effort over the next decade, we can meet the “audacious” goal of “a sustainable health care system” (Penn) since “APMs hold great promise” (MedPAC). No, they don’t. The goal is not to satisfy smug policy wonks, but rather it is to provide the health care needs of patients. Enacting and implementing a single payer, improved Medicare for All would move us a lot closer to “value” as we might define it, no matter the volume of cases we are presented with.

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