pnhpf3a

By Deborah Peikes, Stacy Dale, et al (Mathematica Policy Research and Center for Medicare and Medicaid Innovation)
Health Affairs, May 23, 2018

Abstract

The Comprehensive Primary Care Initiative (CPC), a health care delivery model developed by the Centers for Medicare and Medicaid Services (CMS), tested whether multipayer support of 502 primary care practices across the country would improve primary care delivery, improve care quality, or reduce spending. We evaluated the initiative’s effects on care delivery and outcomes for fee-for-service Medicare beneficiaries attributed to initiative practices, relative to those attributed to matched comparison practices. CPC practices reported improvements in primary care delivery, including care management for high-risk patients, enhanced access, and improved coordination of care transitions. The initiative slowed growth in emergency department visits by 2 percent in CPC practices, relative to comparison practices. However, it did not reduce Medicare spending enough to cover care management fees or appreciably improve physician or beneficiary experience or practice performance on a limited set of Medicare claims-based quality measures. As CMS and other payers increasingly use alternative payment models that reward quality and value, CPC provides important lessons about supporting practices in transforming care.

From the Introduction

Public and private payers are increasingly experimenting with ways to improve primary care delivery, reduce spending, and improve patient outcomes. Payers are also considering ways to strengthen primary care. New primary care models, such as the patient-centered medical home, have had mixed effects on quality and spending.

The Centers for Medicare and Medicaid Services (CMS) launched the Comprehensive Primary Care Initiative (CPC) in October 2012. CPC tested whether requiring practices to implement a new approach to delivering primary care, and providing financial and technical support to help them do so, reduced spending and improved quality over a four-year period in 502 practices across seven US regions. In addition to CMS, thirty-nine other private and public payers supported CPC practices by implementing an aligned approach to changing care delivery and payment.

This article provides an update to earlier evaluation results of the first two years of CPC.

EFFECTS ON SPENDING AND SERVICE USE

Our estimates showed no significant differences in spending growth during CPC, with or without care management fees.

EFFECTS ON QUALITY OF CARE AND PATIENT EXPERIENCE

Over the course of CPC, we found no significant effects on the claims-based quality-of-care process measures for beneficiaries with diabetes or on the continuity-of-care measure, defined as the percentage of primary care visits that occurred at the practice that the beneficiary was attributed to when CPC began.

EFFECTS ON PHYSICIAN EXPERIENCE

Physicians in CPC practices had largely favorable views of CPC in 2016. However, many indicated that CPC’s administrative reporting was a burden and the transformation work was difficult.

Although CPC required intensive work for practices, we found no meaningful differences on measures of burnout, control over work, alignment of work with training, and job satisfaction between physicians in CPC practices and those in comparison practices in 2013 or 2016.

From the Discussion

Practices participating in the Comprehensive Primary Care Initiative improved some aspects of care delivery, which in turn led to less growth (relative to comparison practices) in numbers of ED visits and thirty-day ED revisits among fee-for-service Medicare attributed patients. However, the four-year initiative did not reduce Medicare hospitalizations or reduce Parts A and B spending enough to cover care management fees. There were no appreciable improvements in patient experience, claims-based quality of care, or physician experience, except that patients reported more follow-up care after hospitalizations and ED visits. Beyond the reduction in ED visits, the additional two years to transform care delivery did not substantively alter the earlier results from midway through the initiative.

Results from CPC illustrate how hard it is to reduce Medicare spending. There are several potential reasons why the findings were not more favorable. First, primary care practices might need stronger value-based financial incentives, accompanied by strong and consistent incentives for other providers (such as specialists and hospitals) that care for the same patients.

Second, some participating practices reported facing barriers to improving care delivery (for example, the burden of reporting, potentially limited actionability of data feedback, insufficient health information technology support for care delivery, and poor health information exchange) that may have made implementation of the initiative less robust than it might have been without such barriers.

Third, general care delivery improvements by comparison practices and other providers—for example, in response to Medicare’s financial penalties for high readmission rates—could have made it challenging for CPC practices to improve their outcomes relative to those of comparison practices.

CPC+

CPC+ aims to improve on these outcomes by building several new elements on the same foundation of multipayer support and five primary care functions. First, CPC+ introduces a second track that deepens care delivery requirements for practices with more experience in delivering advanced primary care.

Second, CPC+ further moves away from traditional fee-for-service by providing a hybrid payment for practices in the second track (combining a portion of fee-for-service and global payment for evaluation and management services).

Third, CPC+ strengthens incentives. It replaces shared savings with a prepaid bonus that practices must repay if they do not meet practice-level performance targets.

Finally, CMS partners with health information technology vendors to encourage improvement in health information technology functionalities to support practices in meeting the care delivery requirements of CPC+.

https://www.healthaffairs.org…

Full report from Mathematica Policy Research (over 300 pages):
https://downloads.cms.gov…

***

Comment:

By Don McCanne, M.D.

CMS is fixated on pushing the health care delivery system into accountable alternative payment models. The Comprehensive Primary Care Initiative is a study that has been going on for four years, and yet the improvements are negligible.

Instead of moving forward with a financing system that really would improve health care spending, CMS is going to expand this experiment with measures such as replacing shared savings with “a prepaid bonus that practices must repay if they do not meet practice-level performance targets.” That’s bizarre since we already know that such policies reduce physician satisfaction and increase burnout. That can’t be their policy goal, or is it?

Enough experimentation with alternative payment models. We definitely need to keep improving primary care, but not with financing policies that don’t work. Let’s go right to the model that does work – a well designed, single payer, improved Medicare for all. Within that system we can refine primary care to make it work well for all of us – patients and health care professionals alike.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Clara Son
Avalere, May 22, 2018

New research from Avalere finds that seniors with Medicare prescription drug plans (Part D) pay more for generic drugs even as the market price of these drugs stays stable.

Avalere experts note that seniors are paying more because generic drugs are being placed on higher formulary tiers where patients pay more out of pocket for drugs. The number of generic prescription drugs placed on the lowest tier, where patients pay less for their drugs, declined 53 percentage points between 2011 and 2015. This shift resulted in a 93% increase in total patient cost sharing for these drugs, or a total of $6.2 billion.

This higher cost sharing and movement of generics to higher tiers did not correspond with an increase in the underlying price of generic drugs over that same time period, according to an analysis by Avalere experts of the average volume-weighted price of generics that were included on plan formularies in both 2011 and 2015.

In 2011, 71% of generic drugs were placed on tier 1, the lowest tier in the formulary. By 2015, 19% of covered generics were placed on tier 1, while 46% were placed on tier 2 and 35% were placed on tier 3 or higher. This shift represents a 53 percentage point decrease in the number of generics being placed on the lowest tier between 2011 and 2015.

The use of generic drugs has saved the Medicare Part D program billions of dollars. However, higher tier placement of generic drugs is leading to higher out-of-pocket costs for patients and may reduce savings.

http://avalere.com…

In response, the Pharmaceutical Care Management Association (PCMA) released the following statement which still does not refute the fact that the industry moved more expensive generics into non preferred tiers in order to keep Part D premiums competitive:

https://www.prnewswire.com…

***

Comment:

By Don McCanne, M.D.

This report confirms that the industry shifted over half of generic drugs out of the lowest tier into higher tiers wherein patient cost sharing is higher. This benefits the pharmacy benefit managers because the shift in costs to the patients allows them to keep the Part D premiums more competitive, but it certainly has an adverse impact on seniors who are dependent on generic medications that are supposed to be cheaper than the brand names.

In fact, it has been reported that the cost sharing of generic drugs is sometimes greater than the full price of the generic if it were purchased without using the insurance, and the pharmacy benefit managers may have gag clauses prohibiting the pharmacist from telling the patient that it would cost less if they didn’t use their insurance. Would you call this nefarious?

This is one more example of how the private sector takes good care of the industry itself while using the patients as pawns. Not only are prices high, insurance premiums are unaffordable for many, and they also shift more costs to patients’ pockets as they take away their choices in health care, whether through narrow provider networks or through unaffordable deductibles and other cost sharing. To add to the insult, we pay more because of the high costs of administering these shenanigans.

Through a well designed, single payer, improved Medicare for all we would have the full range of choices in health care with no need for the patient to share costs of the health care services and products at the point of service. When people need care, they simply get the care they need. And, of course, everyone is included for life, and we can do that without spending any more than we already do by using equitable public financing.

Now explain again the basis of those disingenuous arguments that are going around that this approach is not feasible. It is the only approach that is feasible if we want everyone to have affordable health care.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Christopher S. Girod, Susan K. Hart, Scott A. Weltz
Milliman Research Report, May 21, 2018

In 2018, the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $28,166, according to the Milliman Medical Index (MMI).

2018 MMI Components of Spending

31% ($8,631) – Inpatient

19% ($5,395) – Outpatient

29% ($8,275) – Professional services

17% ($4,888) – Pharmacy

4% ($995) – Other (Home health, ambulance, DME, prosthetics)

Employers pay more; employees pay a lot more

The MMI’s healthcare expenditures are funded by employer contributions to health plans and by employees through their payroll deductions and out-of-pocket expenses incurred when care is received. Over the long-term, we have seen employees footing an increasingly higher percentage of the total. That trend continues in 2018, with employee expenses increasing by 5.9% while employer expenses increased by only 3.5%.

Employees’ share of healthcare costs

The total cost of healthcare for the MMI family of four is shared by employers and employees. To clearly define each payment source, we use three main categories:

1) Employer subsidy. Employers that sponsor health plans subsidize the cost of healthcare for their employees by allocating compensation dollars to pay a large share of the cost.

2) Employee contribution. Employees who choose to participate in the employer’s health benefit plan typically also pay a substantial portion of costs, usually through payroll deduction.

3) Employee out-of-pocket cost at time of service. When employees receive care, they also often pay for a portion of these services via health plan deductibles and/or point-of-service copays.

Relative Proportions of 2018 Medical Costs

56% ($15,788) – Employer contribution

27% ($7,674) – Employee contribution

17% ($4,704) – Employee out-of-pocket

The Milliman Medical Index is an actuarial analysis of the projected total cost of healthcare for a hypothetical family of four covered by an employer-sponsored preferred provider organization (PPO) plan. Unlike many other healthcare cost reports, the MMI measures the total cost of healthcare benefits, not just the employer’s share of the costs, and not just premiums. The MMI only includes healthcare costs. It does not include health plan administrative expenses or insurance company profit loads.

http://us.milliman.com…

***

Real Median Household Income in the United States

Federal Reserve Bank of St. Louis; FRED – Economic Data

$59,039 (2016)

https://fred.stlouisfed.org…

***

Historical Income Tables: Families

United States Census Bureau

Table F-8. Size of Family – Families by Median and Mean Income

Families with four people:
Median income $90,746 (2016)

https://www.census.gov…

***

Comment:

By Don McCanne, M.D.

The Affordable Care Act was supposed to make health care affordable for all Americans while protecting the segment of health care coverage that seemed to be working well – employer-sponsored health plans. So the typical working family of four now pays through premiums, cost sharing and forgone wage increases (for the employer contribution) an average of $28,166.

For this select population – employed families of four with insurance through work with a median income for a family of four ($90,746) – the average payment is 31 percent of income. Of course, this is a family that is doing well. If a family with a median household income ($59,039) spent the same amount on health care it would be 48 percent of income.

One more significant point. That $28,166 is what is actually spent on health care. It does not include health plan administrative expenses nor insurance company profits, and we know what that means.

People want to know what they would be paying under a single payer Medicare for all system. When they ask, they should be reminded that they first need to understand what they are paying now. They understand the premium that is deducted from their paychecks, but they need to find out how much the employer is paying because that represents a reduction in their wages. They also should look at what they pay out of pocket for deductibles and other cost sharing while keeping in mind that they need to maintain reserves should they receive a major hit in their health. They should also realize that over half of health care in the United States is paid through our taxes, and most of that health care spending is relatively opaque for the average individual. Taxpayer-funded health care spending includes Medicare, Medicaid, CHIP, VA Health, military medicine, Indian Health Service, Public Health Service, much of the cost of health insurance purchased for federal, state, and local government employees, and the tax expenditures from the exclusion of employer contributions for medical insurance premiums and medical care (tax exclusion of $236 billion in 2018!). So that $28,166 represents only the most direct spending on health care for that individual family; they are paying much more through the tax system.

People want to know what the tax for a single payer system would be that would be deducted from their paychecks. Then they want to compare that with the current deduction for their employer-sponsored plan, not considering that that is only a very small fraction of the total amount they are actually paying. Because each person’s situation is different, it is impossible to give a precise dollar amount that they would be paying under an improved Medicare for all, but we can say that the amount will be equitable – fair – based on progressive taxes, and that, for all but the wealthiest, will be less than they are paying now (not to mention that they are assured coverage for life). And for the very wealthy, it would be painless anyway. They wouldn’t even know what are paying for health care through their taxes unless their accountant told them.

So remember the Milliman Medical Index – the typical working family of four is already paying on average over $28,000 for employer-sponsored health care, but also don’t forget how much we are already paying in addition through the tax system. We can’t just walk away. We need to enact an equitable financing system that ensures that everyone receives health care that is affordable. That would be a well-designed, single payer, improved Medicare for all.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Dhruv Khullar, Amitabh Chandra, Rahul Rajkumar
Health Affairs Blog, May 18, 2018

Spending on hospital care accounts for one-third of US health care expenditures, or $1.1 trillion—a sum that exceeds total medical spending for all health care goods and services in some other high-income countries.

While total spending on health care services is a product of how many services we use and how much we pay for each, most efforts to limit cost growth have focused primarily on reducing the delivery of unnecessary or low-value care; there has been relatively little attention given to reducing the level of prices. But higher prices—not necessarily higher rates of utilization—drive excess spending in the United States.

Accountable care organizations (ACOs) have been a major focus of delivery system reform, proposed as a way to promote high-value care and reduce costs. ACOs may encourage integration of care, shift spending toward important non-clinical services (for example, care management), and discourage delivery of unnecessary services. But they have yet to produce substantial cost savings and are unlikely to directly confront the fundamental problem of high prices.

One reason ACOs have thus far generated limited savings may be that they attempt to organize and provide all care within their network of providers. This may allow for better care integration and coordination, but it prevents them from taking advantage of providers outside the ACO who may be able to deliver lower-price, high-quality care because of their greater specialization. We can address this problem if we reimagine ACOs—along with other delivery system innovations such as medical homes—as consumers, with more sophistication, incentive, and bargaining power than patients. Conceptualized this way, ACOs can encourage competition among bundlers of hospital care and help lower prices.

Barriers To Hospital Price Competition And The Limits Of Patient Consumerism

In most industries, consumers apply competitive pressure on vendors to reduce the price and improve the quality of available products. But in health care, the ability of patients to shop effectively and create meaningful competition among providers is limited. This is particularly true for hospital care, for which prices vary widely across the country with little relation to outcomes. Can consumerism work when it comes to hospital care? And can ACOs be part of the solution?

Two principal factors prevent patients from functioning as traditional consumers. First, hospital care is not organized into well-defined, easily understood, clinically meaningful units. Instead, each service is billed for separately, and a complex menu of “charges” for thousands of individual billing codes—entirely divorced from outcomes—makes it difficult to shop for episodes such as childbirth, joint replacement, or treatment of coronary artery disease.

Second, health insurance largely insulates patients from costs, so they are not well-positioned to apply competitive pressure on hospitals for expensive care. Because most hospital spending occurs above out-of-pocket maximums, high-deductible plans are unlikely to help. Even below the deductible, it is not clear that patients shop effectively for health care services.

These two forces—opaque pricing and poorly incented patients—constrain the ability of markets to take on a growing challenge: Prices for hospital services are often not the result of competition among providers. Public payers generally use regulated prices, which offer similar prices to high- and low-quality hospitals. For private payers, prices are largely determined by hospitals’ bargaining leverage, which is problematic in rural areas, in markets where hospitals have considerable brand identity and clout, and in regions with substantial hospital consolidation.

Bundled Payments As A Path To Greater Pricing Competition

What Is The Product Being Delivered?

Bundles include care for the full cycle of a well-defined medical condition and offer several advantages over traditional ways of organizing care: They capture the receipt of care for the duration of a medical episode; they put delivery of effective care largely within the control of providers; and they mimic how consumers generally purchase goods and services in other industries.

How Are Prices Determined?

Bundling services allows for more competitive pricing than ACOs and similar approaches through two channels. First, more providers can compete on a given bundle than can compete to assume responsibility for a large population. Smaller hospitals and ambulatory surgical centers, for example, can offer bundles to compete with larger, incumbent hospitals on specific services but are unlikely to have the capital and scale to compete on all services.

Second, if bundles are standardized by private or public payers—and price and outcomes data are publicly reported—insurers, ACOs, and patients can more effectively compare service delivery cost and quality across providers.

Who Is The Consumer?

Bundled payments allow ACOs and medical homes to function as consumers. ACO providers, usually primary care physicians, often engage other providers to deliver specialized care and must evaluate the price and quality of the services they offer patients. ACOs are in a better position to identify high-value services than are individual patients and could facilitate price competition among contracting providers.

Current iterations of bundled payments take steps toward achieving these goals, but there is more to be done. Medicare bundles are mostly administered retrospectively, so physicians still report fee-for-service claims, which does little to disrupt existing practice patterns.

Future iterations of bundled payments may allow for greater use of complementary pricing initiatives, such as reference pricing, by which payers agree to pay a set price for a bundle and additional costs are borne by consumers.

Bundled services could also allow for expanding Medicare’s competitive bidding program, which currently only includes certain medical equipment and supplies, to include Medicare Part B services offered by providers competing on bundles.

Combining bundles with ACOs and medical homes also allows for progress on some traditional challenges with bundles. For example, it is not clear how bundles should be structured for preventive and primary care services, or for comorbid chronic disease management. Moreover, while bundles encourage care efficiency within the bundle, they do not limit the total number of bundles. However, a payment structure that funds difficult-to-bundle care through capitated payments to physician-led ACOs and medical homes—and gives them the option to shop for and purchase hospital care using bundles—may mitigate these problems and lower the cost of care.

Bundles still need refinement. As with other payment models, risk adjustment and outcomes measurement are challenges. Dividing a single bundled payment among several providers can be difficult, and bundling hospital and postacute care, physician and nursing care, and drugs and devices will require large organizational changes within hospitals and investments in cost accounting. Nevertheless, expanded use of bundled payments is a potential path toward greater price competition for hospital services. Bundles have often been thought of as a mechanism to integrate care, but their greatest impact may be increasing the number of providers in the health care markets, and redefining and strengthening the role of the consumer.

***

Published Comment:

By Stephen Kemble, M.D.

Two problems with this proposal:

1. Bundles incentivize delivering more bundles of care for low risk patients, which can mean more unnecessary care.

2. The majority of health care is not in the form of discrete episodes of care for acute conditions or specific procedures. It is for care of chronic conditions for which there are no clear end-points for starting and ending a bundle.

I believe the whole idea of trying to control prices via competition is not likely to work. For one thing, in many markets, including rural and poverty areas with a high percentage of Medicaid and uninsured patients, hospitals are already losing money and can’t afford to reduce prices. We should be focusing on reducing administrative cost and burdens combined with price controls, instead of competition, if we want to reduce prices without destroying care for large segments of the population, including those who are poor, chronically ill, or elderly, and who need care the most.

https://www.healthaffairs.org…

***

Comment:

By Don McCanne, M.D.

The policy community remains obsessed with the concept of using competition to harness the power of the consumer in order to bring under control our high health care prices in the United States. The record to date demonstrates the utter failure of this approach, but that does not keep them from trying, no matter how lame their various proposed innovations.

Today’s proposal acknowledges that patients do not function well as consumers in the health care environment, But to save the concept of consumerism, they suggest that the health care providers consolidate, bundle together what can be bundled, while clumping together difficult-to-bundle care as ACOs or medical homes, and then delegating themselves as consumers of their own bundled services, serving as proxies for their patient-consumers. Egad!

Our colleague, Stephen Kemble, in his posted comment, sees through this policy smokescreen. In spite of all the talk about bundling care, most care does not package into neat bundles. Second, the providers that do have bundles to sell want to sell more of them when it is not only prices but also quantity that determines the total health care spending.

Kemble’s most important point is that, instead of relying on competition, “we should be focusing on reducing administrative cost and burdens combined with price controls.” Administrative waste and high prices have been proven to be the two greatest sources of recoverable waste in our runaway health care spending. Competition has not controlled them; in fact, the markets have only made them worse.

It is astonishing that these market ideologues do not acknowledge the beneficial health financing policies that are just outside their box – automatic lifetime coverage for everyone prepaid through equitable, public financing, in a system that is publicly administered far more efficiently than with our fragmented, multi-payer system. Maybe someone should attach a door knocker onto their box so we can get their attention.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.