PNHP

More market fiddling, that’s the answer!

More market fiddling, that’s the answer!

Summary: In a JAMA opinion piece, two physicians with homes in the business world propose payment innovations for our multi-payer health care system. Are these proven strategies? Of course not. Do they betray a blind faith in the magic of the marketplace? Sure do.

Setting the Stage for the Next 10 Years of Health Care Payment Innovation, JAMA, August 16, 2021, by Bob Kocher and Rahul Rajkumar

This Viewpoint describes 4 health policy strategies:

Broaden Participation in Alternative Payment Models, Particularly Among Specialists

Alternative APMs [e.g., Accountable Care Organizations] include higher levels of risk and therefore reward clinicians with more money for more cost savings and ensure that the Medicare program saves money by transferring risk to physicians. … A better approach would be to broaden the value-based payment portfolio by creating APMs for specialists …

Ensure That Payment Systems Reward Multiyear Investments in Health

A major shortcoming of the current system is that investments in health have very short payback periods. These time frames make it challenging to invest in interventions that have longer-term benefits, even when these investments may produce substantial improvements in health. …

A new funding mechanism for breakthrough preventive care, such as health-related bonds, which are held by investors, and which increase in value along with a person’s long-term health, could create a strong incentive to address social determinants of health and healthier lifestyle interventions.

Align Payment Models Across Payers

One model could be moving to a capitated payment model for hospital services so hospitals receive monthly payments for the availability of their services rather than be paid on a fee-for-service basis.

Reduce the Administrative Burden of Risk Adjustment and Quality Measure Reporting

Commercial, Medicare Advantage, and Medicaid payers should adopt the same patient attribution, quality metrics, and risk adjustment (when appropriate) methods as Medicare.

Comment:

By Don McCanne, M.D. and Jim Kahn, M.D., M.P.H.

This Viewpoint proposes a set of innovations based on shoddy, non-existent, or discouraging data. One example is shared savings programs. like accountable care organizations. As we recently wrote, Medicare’s experiment with ACOs failed. Why continue it? And why shift to hospital capitation when the primary problem is prices, not utilization? And, if you’re looking for the big pot of gold, why not eliminate $800 billion in annual excess billing-related administrative costs that derives from the morass of insurance products and rules?

The language used by the authors highlights the business orientation. Besides investors gambling on health-related bonds, they also mention bundling for specialists who agree to provide “parsimonious” care, making APMs more “attractive economically” for specialists, and, of course, the great overlooked potential of producing financial savings merely by “reversing” diabetes. Rather than basing the system on the opportunity to improve patient and population health, we should be developing systems catering to physician greed, they seem to suggest.

One innovation they don’t advocate: proven unified health insurance systems that lower costs and lengthen lives. Like single payer. Why not? Because, as the authors’ affiliations indicate, their interest is in making money.

Ah, marketplace innovations, they’ve worked so well for healthcare up to now, as we can all see. Clearly the best medicine is more of the same!

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Learning from Costa Rica

Summary: Atul Gawande writes a compelling New Yorker report of how Costa Rica melded medicine and public health to greatly reduce disease and lengthen life. If the U.S. is to learn from this inspiring example, we’ll need universal coverage with no cost barriers, robust health data, and strong primary care. Single payer will help pave the way.

Costa Ricans Live Longer Than Us. What’s the Secret?, The New Yorker, August 23, 2021, by Atul Gawande

“People who have studied Costa Rica, including colleagues of mine at the research and innovation center Ariadne Labs, have identified what seems to be a key factor in its success: the country has made public health—measures to improve the health of the population as a whole—central to the delivery of medical care. Even in countries with robust universal health care, public health is usually an add-on; the vast majority of spending goes to treat the ailments of individuals. …

As the pandemic ebbs, countries will be assessing what went wrong with their public-health systems. A fundamental failure has been the separation of public health from health-care delivery. Getting that right, across the globe, could present our greatest opportunity to secure longer and better lives.”

Comment:

By Isabel Ostrer, M.D.

Atul Gawande’s captivating article about Costa Rica’s robust public health system describes a framework for how to improve health outcomes — one that a single payer healthcare system can facilitate. In fact, I contend that a unified health system is a prerequisite for implementing this type of comprehensive delivery.

Gawande recounts the three principal elements of Costa Rica’s universal approach to care: 1) merge public health services with hospital- and clinic-based care, 2) collect and integrate household-level demographic data with medical records to drive national health priorities, and 3) emphasize local primary care delivery.

Single payer provides the prerequisites for this transformation by:

1) Facilitating marginalized communities’ access to care: For the Costa Rican model to work, everyone needs excellent access to care. In the U.S, 33 million Americans are uninsured and nearly ⅓ of insured adults are inadequately insured. Single payer would eliminate barriers to care by ensuring every American has health insurance, with no point of care costs (premiums, co-pays, and deductibles) which discourage care seeking.

2) Creating a unified electronic health record: Electronic health records (EHR) are clunky and disparate, and don’t communicate with each other. A 2018 report revealed that fewer than half of office-based physicians were able to exchange health information with providers outside their organization electronically. A single payer system would prioritize a single EHR that allows easy exchange of information among medical providers. This foundation could be expanded to include public health data, mirroring the Costa Rican system Gawande describes.

3) Prioritizing a primary health workforce: Greater primary care is associated with lower mortality, lower costs, and higher quality of care. But the number of primary care physicians (PCPs) decreased from 46.6 to 41.4 per 100,000 people between 2005 and 2015. This is unsurprising given that the median PCPs’ income is just 60% of specialists’. The Medicare for All Act of 2019 establishes an Office of Primary Health Care to expand the primary care workforce and ensure greater access to care, particularly in underserved areas. Moreover, primary care compensation would increase through two mechanisms. First, a single payer system would compensate previously unreimbursed care. Second, it would free up time previously spent on administrative work for reimburseable direct patient care.

Gawande writes that as countries assess how they could have better responded to the Covid-19 pandemic there will be more focus on public health infrastructure. Indeed, this moment of reflection is an opportunity to fundamentally rethink how we deliver care with emphasis on universal coverage as a foundation to “braid together public health and individual health.”

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Single-payer is much better system

By Kathleen Healey, M.D.
Napa Valley Register, August 27, 2021

In a recent column, Dan Walters notes that Gov. Newsom has not fulfilled his promise as a single-payer champion. (“Newsom slow-rolls single-payer health care promise,” Aug. 16) He suggests that the governor is leaning toward incremental change to expand health care — a “heavy financial lift.”

The most cost-effective way to universal healthcare is with the government as the single-payer, which most of our allies have discovered. Why? 97% of the money goes to healthcare services and we save large sums of money by not sending 25-30% of our health care dollar to our middlemen for-profit insurance companies who use it for advertising, CEO salaries, shareholder profits, lobbyists, and large banks of administrators who deny services to patients, and payments to doctors, in order to increase their own profits.

Raising your taxes to pay for universal healthcare is a scare tactic to make you think your costs will rise when, in fact, most people will pay less. Think of the employee portion of your insurance that comes out of your salary, your co-pays, deductibles, and drug costs. America’s healthcare system is the most expensive in the world and ours scored last out of 11 countries in The Commonwealth Fund’s most recent report.

A tax paid by everyone would be fair, less costly for most and families would no longer have to worry about medical debt, bankruptcy, or losing insurance with job loss, as we saw with the pandemic.

Incremental expansion of Medicaid and ACA is more expensive for the state and gives people insurance cards that many physicians will not accept, forcing more trips to emergency rooms, a costly alternative. With a single-payer, physicians have the same fee schedule for every patient, and submit their bills to one payer only, as is done with Medicare. This markedly reduces administrative costs for everyone, which currently amount to $815 billion each year nationally.

The California Legislature under Gov. Newsom’s direction has created the Healthy California for All Commission to study single-payer financing. It is continuing to meet during the pandemic. The commission will send its recommendation to Newsom when it concludes its study.

With the big money on the side of the status quo, popular demand is needed to convince our governor and our legislators that we want healthcare to be considered a common good, like fire services, and elementary education, as it is in most countries, and not privatized for profit. A healthy state is a more productive state and more preventive care will reduce future health expenditures and improve our lives.

Remember, single-payer healthcare is not socialized medicine. Doctors’ practices and hospitals remain private. What changes is where their invoices are sent. Specifically, invoices go to a single government agency instead of a multitude of for-profit insurance companies.

Please connect today with Health Care for All-CA. (heatlhcareforall.org) or Physicians for a National Health Program (pnhp.org).

https://napavalleyregister.com…

PhRMA Distorts Public Opinion on Drug Price Negotiation

Summary: The pharmaceuticals trade association ran a big ad claiming that Americans oppose negotiations on drug prices. It is dishonest: only after hearing pharma’s scare tactics do most Americans become opposed. It’s time for drug price negotiations in Medicare.

Axios Vitals, August 24, 2021

Message from PhRMA

KFF Health Tracking Poll – May 2021: Prescription Drug Prices Top Public’s Health Care Priorities, June 3, 2021

From the Key Findings

Overall, nearly nine in ten (88%) favor allowing the federal government to negotiate for lower prices on medications, including three-fourths (77%) of Republicans, nine in ten independents (89%) and 96% of Democrats. And while majorities of the public continue favoring this proposal after hearing that people and the federal government could save money on their prescription drugs if this policy were implemented, majorities oppose this policy proposal [after hearing the] argument made by pharmaceutical companies that it could lead to less research and development for new drugs, or that access to newer prescriptions could be limited.

Comment:

By Don McCanne, M.D.

The KFF Health Tracking Poll was the reference provided by PHARMA to support their claim that Americans reject government negotiation in Medicare. Yet the tracking poll indicates that 88% do support allowing federal negotiation for lower prices on medications. What they report as a myth is actually a fact. What they report as a fact is actually a myth. Only when told specifically that negotiations could cause less drug research or less access to newer prescriptions (dubious claims meant to scare us) do 65% become opposed.

The fact is that PHARMA is being dishonest in presenting an ad that can only be interpreted as representing American opposition to drug price negotiation, when the opposite is true. They certainly do not deserve to have their price gouging protected, especially when based on deception. It’s long past time to enact government drug price negotiation for Medicare.

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Pharmacy Benefit Managers: The mystery bureaucrats managing your prescription drugs

By Linda L. Ujifusa, Esq. and J. Mark Ryan, M.D., F.A.C.P.
Uprise RI, August 25, 2021

“In between most patients and healthcare providers are middlemen health insurers (“payers”) who take money from patients, pay some to healthcare providers, and keep some for themselves. These multiple payers cause the United States to spend about twice per capita what other industrialized nations with “single payer” spend and they get better universal healthcare…

Summary:

About 40% of Americans struggle to afford their regular prescription medicines – with 1/3 saying they have skipped filling a prescription one or more times, because of the cost. COVID-19 has exacerbated the problem by causing job and health insurance loss and delaying routine care.

Rhode Island policymakers know skyrocketing prescription drug prices must be better controlled.

Unfortunately, they have ignored a key cost driver: Pharmacy Benefit Managers (PBMs).

PBMs such as CVS Caremark, Express Scripts and OptumRx “manage” prescription drug benefits on behalf of insurers and siphon off enormous revenues in the complex non-transparent system that gets drugs from manufacturers to patients.

Other states are doing a much better job monitoring and controlling PBMs and have saved consumers and tax payers hundreds of millions of dollars.

Rhode Island should follow their lead.

To urge RI policymakers to take action, please sign this petition.

A fully footnoted version of this article is available to download here.

What are PBMs?

In between most patients and healthcare providers are middlemen health insurers (“payers”) who take money from patients, pay some to healthcare providers, and keep some for themselves. These multiple payers cause the United States to spend about twice per capita what other industrialized nations with “single payer” spend and they get better universal healthcare.

In the middle of payers, patients and pharmacies, there are Pharmacy Benefit Managers (PBMs).

PBMs: Middlemen for middlemen

PBMs are for-profit companies that “manage” prescription drug benefits for more than 266 million Americans on behalf of payers, including private insurers, Medicare Part D drug plans, government employee plans, large employers, and Medicaid Managed Care Organizations (MCOs).

PBMs help payers:

  1. create a list of covered drugs for plans (“a formulary”);
  2. manage drug utilization by enrollees (e.g., by setting co-pays, prior authorization policies, etc.);
  3. reimburse pharmacies for providing the enrollee drugs.

This article will focus on:

  • Who are Pharmacy Benefit Managers (PBMs)
  • How PBMs Harm Consumers and Taxpayers
  • PBM Oversight in Other States
  • Potential Roadblocks to RI Reforms
  • How RI Can Rein in PBMs

Who are Pharmacy Benefit Managers (PBMs)?

PBMs began in the 1970s as small independent middlemen between insurers and pharmacies, taking a set fee for processing claims.

Today, three PBMs control 80% of the market and are part of large vertically integrated conglomeratesthat include health insurance companies and pharmacies (including “specialty pharmacies”)

PBMs are also part of a complex non-transparent distribution system that gets drugs from manufacturers to beneficiaries (see Figure 1).

Source: https://healthpolicy.usc.edu/research/state-drug-pricing-transparency-laws-numerous-efforts-most-fall-short/, adapted from, Sood, N., et al., “Flow of Money Through the Pharmaceutical Distribution System,” USC Schaeffer Center for Health Policy white paper.

In this system, businesses can keep payments and discounts between themselves confidential, but analyses show that pharmaceutical manufacturers make the most profits for developing and manufacturing prescription drugs AND:

Revenues of top PBM conglomerates exceed those of top pharmaceutical manufacturers.

PBM conglomerates rank 4th (CVS), 5th (UnitedHealth Group) and 13th (Cigna) on the Fortune 500 list ranking largest corporations by revenue.

PBMs drive revenues for their parent companies:

  • “CVS Health’s Pharmacy Services (PBM) segment will make 46% of $324 Billion in 2021 revenues for the company and remains key to its revenue growth.”
  • In 2019, Cigna’s total revenues more than doubled ($14.3 billion to $38.2 billion) and its Express Scripts Holding Co. unit was the “driving force” behind the $22 billion surge.
  • UnitedHealth’s Optum subsidiaries collected more profit in the fourth quarter of 2019 ($3 billion) than United Healthcare insurance ($2.1 billion)

How PBMs harm consumers and taxpayers

1. PBMs get legal kickbacks (“rebates”) from drug manufacturers for putting certain drugs on formularies

When PBMs create a list of covered drugs, they negotiate with drug manufacturers for legal kickbacks (“rebates”) in exchange for giving certain drugs preferred placement on formularies (e.g., Tier 1 with no co-pay, etc.).

Kickbacks are generally illegal under federal law, but PBMs are given a “safe harbor” and a federal rule making PBM rebates illegal has been delayed.

PBMs have a conflict of interest developing formularies because they get more money for shareholders by choosing an expensive drug with a higher rebate than by choosing the most effective or affordable drug for consumers.

Although PBMs pass rebates to insurers (who may be their parent companies) and claim this will result in lower premiums and co-pays, analyses show there is no such trickle down to consumers.

In fact, drug manufacturers cover PBM rebates by raising their list prices for drugs and consumers pay a higher co-pay because they pay a % of the higher list prices.

At $143 billion in 2019, it is estimated that rebates added nearly 30 cents per dollar to the price consumers pay for prescriptions.

2. PBMs overcharge payers (including state Medicaid) and underpay pharmacies because they can keep the difference (“spread”) between what they are paid and how much they reimburse pharmacies

Multiple states have found PBMs problems related to their keeping the “spread.” An Ohio audit, for example, found that in one year, “CVS Caremark and UnitedHealth’s OptumRx PBMs reaped more than $223 million—and made an 8.8% profit—by overcharging Medicaid managed care plans, underpaying pharmacies, and pocketing the difference.”

Ohio found the spread came to $5.70 per prescription across all brand-name and generic drugs and that Ohio could have gotten the same services for $1.90 per prescription or less by switching to a fee-based model – where pharmacies are reimbursed their acquisition cost plus a set administrative fee.

Ohio ordered managed-care plans in the state to terminate PBM spread pricing contracts for 2019.

3. PBMs “claw back” and keep excess consumer co-pays

Consumers are often unaware they could have paid less if they had NOT used their insurance (for example, when a co-pay is $10, but the drug price without insurance is $7).

Although consumers should be allowed to recover such overpayments, PBMs are the ones who “claw back” overpayments – and keep them.

A study by researchers at the University of Southern California Schaeffer Center for Health Policy & Economics found that because of PBM claw backs, customers overpaid for their prescriptions 23 percent of the time.

4. PBMs profit from a federal program (“Section 340B”) meant to help low income patients

In 1992, Congress enacted Section 340B of the Public Health Service Act mandating that pharmaceutical manufacturers provide outpatient drugs at significant discounts to certain “covered entities.” 340B’s original purpose was to allow a handful of safety-net hospitals that cared for the poor to obtain drugs at substantially reduced prices.

Changing federal laws caused the number of entities eligible for 340B discounts to explode so that today, there are now about 5,000 covered entities and 20,000 affiliated sites, as well as, “30,000 pharmacy locations—half of the entire United States pharmacy industry – now act[ing] as contract pharmacies for the hospitals and other healthcare providers that participate in the 340B program.” 340B discounted drugs make up “more than 8% of the total United States. drug market and about 16% of the total rebates and discounts that manufacturers provide.”

This large, complex and relatively unknown program is detailed here, but PBM problems generally involve their engaging in “discriminatory reimbursement,” e.g., offering 340B entities lower reimbursement rates than those offered to non-340B entities.

Currently, the federal 340B statute allows PBMs to make significant revenues and not pass money to those Section 340B intended to help.

5. PBM conglomerates own retail, mail order and specialty pharmacies and can work against consumer interests by:

  • Setting low reimbursements for their competitors – a cause of local independent pharmacies disappearing.
  • Pharmacy Steering – PBMs “steer” customers to pharmacies, including mail order and specialty pharmacies, with whom they are affiliated, e.g., by requiring a higher copay if the patient obtains the drug from a non-affiliated pharmacy.
  • Pharmacist gag orders – despite a federal law and a new 2021 Rhode Island law that prohibits PBMs from preventing pharmacists from discussing cheaper options, the consumer still has to ask and may not be told all options.

6. PBMs can hide profits

Reasons for the lack of transparency noted in Figure 1 include:

  • PBMs keeping their negotiated discounts and rebates confidential – even from a recent federal Senate committee investigating insulin prices.
  • PBMs disguising profits, e.g., as “rebate management fees” and “savings.”
  • PBMs controlling their own audits, e.g., by having the right to veto auditors, determine frequency of audits, require auditors to sign “Confidentiality Agreements,” etc.

7. PBM “Utilization Management” can harm patients

PBMs claim to implement “utilization management” strategies on behalf of payers to benefit payers AND consumers. These strategies can include:

  • “Prior authorization,” which requires patients to get third-party approval prior to getting the medicine prescribed by their healthcare provider.
  • “Step therapy,” also known as “fail-first,” “sequencing,” and “tiering,” which requires patients to start with lower-priced medications before being approved for originally prescribed medications.
  • “Non-medical drug switching” which forces patients off their current therapies for no reason other than to save money. “Tactics include increasing out-of-pocket costs, moving treatments to higher cost tiers, or terminating coverage of a particular drug.

Unfortunately, such utilization management can also harm consumers by making providers spend excessive time on administrative tasks, delaying and discouraging patient care, and adversely affecting clinical outcomes.

PBM Oversight in Other States

Rhode Island has some PBM-related laws and regulations, but other states are more aggressively investigating and reining in PBMs to better protect consumers and tax payers.

A recent Supreme Court case, Rutledge v. PCMA, supports states taking more actions to regulate PBMs.

Some actions other states are taking include:

1. Imposing transparency reporting requirements

27 states with private insurance companies (Managed Care Organizations – MCOs) managing their Medicaid programs reported they will have transparency reporting requirements in place in FY 2020. For example:

  • Texas passed a 2019 law requiring PBMs to report information to the state and discovered, “Since 2016, through a complex rebate and price concession process, the PBM industry in Texas pocketed more than $350 million in revenue, while passing a mere $16 million in savings to enrollees.”

2. Investigating PBMs

Several states have investigated or are currently investigating PBMs.

  • Florida: State audit found “prescription markups” by PBMs cost Florida’s Medicaid system $113.3 million in 2020 ($89.6 million in “spread costs”).
  • Kentucky: Attorney General investigating PBMs for overcharging the state and discriminating against independent pharmacies after state discovers PBMs kept $123.5 million in spread annually.
  • Massachusetts: Investigation found prices charged by PBMs for generic drugs were often “markedly higher” than the actual cost of the drug in both Mass Medicaid Managed Care and Commercial Plans, “contributing to higher health care spending” (e.g., up to 111% more for certain drugs than in fee-for-service state-managed Medicaid program).
  • Mississippi: Auditor General is investigating PBMs suspected of overcharging state Medicaid and the Mississippi State and School Employees’ Life and Health Insurance Plan, which covers nearly 200,000 state employees, retirees and their families after audit found PBMs were paid more than $1.1 billion; sometimes as much as $25 million a month.
  • Pennsylvania: Auditor General found between 2013 and 2017, the amount that taxpayers paid to PBMs for Medicaid enrollees more than doubled from $1.41 billion to $2.86 billion and is urging greater transparency and more state control.

3. Carving out PBMs from managing Medicaid pharmacy benefits

  • Four states reported in 2019 that they generally “carve out” pharmacy benefits from their Medicaid managed care programs (Missouri, West Virginia, Tennessee and Wisconsin) and other states were considering doing so.
    • West Virginia “carved out” PBMs, including Express Scripts and CVS, from its Medicaid managed-care program and began running the program as a fee-for-service program – eliminating spreads and reducing administrative fees. It expected to save $30 million a year—about 4 percent of the state Medicaid drug spending. In fact, WV Medicaid saved $54.4 million in its first year and $122 million that used to go to out-of-state PBMs instead went to West Virginia pharmacies in the form of fixed dispensing fees.
  • Ohio contracted with a single PBM for Medicaid after undertaking the state audit described above and the State Auditor concluding, “It is now overwhelmingly apparent that PBMs are operating the biggest shell game in modern history, and we are all paying for it.

4. Prohibiting spread pricing

About 17 states reported a spread pricing prohibition would take effect by January 2021 (Figure 3).

  • Arkansas: Passed a law, upheld by the Supreme Court, that required all PBMs to reimburse pharmacies at a price equal to or higher than what the pharmacy paid to buy the drug from a wholesaler.
  • Maryland: Banned spread pricing after a state Medicaid report found PBMs pocketed “spread” of $72 million annually.
  • Ohio: Ended spread pricing contracts with PBMs and switched to a pass-through model following a state audit that found PBM profit accounted for 31.4% ($208.4 million) of the $662.7 million paid by Ohio Medicaid MCOs for generic drugs

5. Restricting PBM rebates

  • Ohio: rebates and discounts must be passed back to the state.
  • Maine: required PBMs to pass rebates and other “compensation” to consumers or insurers (who must in turn apply the funds to “offset the premium for covered persons”).
  • West Virginia: now handles pharmacy benefits for both state workers and Medicaid recipients through the West Virginia State University of Pharmacy, saving $38 million in its first year.
  • About 17 states: have enacted stronger laws requiring PBMs to disclose rebate information.

6. Prohibiting “claw backs”

  • About 38 states have prohibited PBM “claw backs.

7. Prohibiting pharmacy discrimination

  • Georgia, Louisiana, Minnesota and Utah have passed legislation banning the practice of “pharmacy steering.”
  • Kentucky created an act that requires PBMs to provide greater transparency and “fair and reasonable” reimbursements.

8. Restricting Section 340B reimbursements

  • About 11 states: have passed legislation to prohibit PBMs from reimbursing 340B covered entities less than other entities who get their standard reimbursement rate.

9. Limiting “Utilization Management”

  • Prior Authorization – 12 states (including RI) have legislation protecting drug classes or categories from using Prior Authorization in some or all circumstances, and most (excluding RI) also apply such statutory limits to Medicaid MCOS.
  • Step Therapy – 11 states have passed and many more are considering legislation to limit Step Therapy, e.g., Arkansas became the first state to pass a comprehensive step-therapy ban.
  • Non-Medical Drug Switching – Several states have prohibited or introduced bills limiting non-medical switching.

Potential roadblocks to RI reforms

1. CVS-Aetna-Caremark

  • CVS Caremark is a large Rhode Island-based corporation whose single biggest source of revenue is its PBM business.
  • Although the full extent of corporate influence is difficult to discern, it can be significant, and:
    • CVS pays lobbyists large sums (e.g., Pharmacy Care Management Association -PCMA, $3,962,000 in 2020) to advocate in RI against PBM reforms.
    • CVS contributes to RI elected leaders who have not voted to investigate nor control middlemen payers and PBMs as healthcare cost drivers.
    • CVS has threatened to cut RI jobs to influence proposed legislation.
    • Since 2010, CVS has secured over $240 million in Rhode Island tax breaks despite apparently cutting its RI workforce from about 12,000 to 3,000 (including getting over $20 million in FY2016 and cutting 247 jobs without notice to the state) and despite taxpayers paying for at least 300 RI CVS employees on Medicaid.

2. The Rhode Island Executive Office of Health and Human Services (EOHHS)

  • RI EOHHS has advocated for RI Medicaid to be “managed” by private insurance companies – despite lack of evidence that privatizing Medicaid serves consumers and taxpayers better than the fee-for-service state-run Medicaid program previously in place.
  • Today, about 90% of RI Medicaid is run by managed care organizations (MCOs): (Neighborhood Health Plan of Rhode Island, Tufts Health Plan and United Healthcare Community Plan) who are paid approximately $1.7 billion annually (about 40% state/60% federal funds) – even though the RI Auditor General, since 2009, has flagged inadequate state MCO oversight.
  • RI MCO contracts, scheduled to expire in April 2022, are missing PBM oversight and restrictions, e.g., they:
    • do not have reporting requirements to identify the amount of PBM spread.
    • do not make statutory limitations on prior authorizations also apply to Medicaid managed care PBMs.

3. RI Office of Health Insurance Commissioner

  • Rhode Island is the only state in the country to have a separate “Office of Health Insurance Commissioner” (OHIC) whose #1 listed purpose is to “guard the solvency of health insurers.” See RIGL § 42-14.5-2.
  • Although OHIC may also seek to protect consumers, it appears to prioritize health insurer economic interests, e.g., raising health insurance premiums during the COVID-19 pandemic.
  • OHIC recognizes prescription drug costs are major healthcare cost drivers, however, its analyses fail to consider what role insurers and PBMs play in skyrocketing healthcare cost.

4. RI Health Care Costs Trends Project

  • The latest major research effort to study Rhode Island healthcare costs is the RI Health Care Cost Trends Project (“Cost Trends Project”), a “private-public partnership” funded by a $550,000 grant from the Peterson Center on Healthcare (PCH), founded by Pete Peterson, a “power from Wall Street to Washington,” who championed the theory that “entitlement programs” like Medicare, Medicaid and Social Security, would wreck the US economy. PCH-sponsored analyses do not analyze whether middlemen insurers and PBMs could be cost drivers.
  • The Cost Trends Project’s goals are to “identify cost and utilization drivers, develop an annual health care cost growth target, and inform system performance improvements.”
  • After spending its initial $550,000 grant, the Cost Trends Project has produced analyses that ignore how insurers and PBMs affect health care costs and could not establish an accurate “annual health care cost growth target.”
  • A majority of the Cost Trends Project’s steering committee and staff:
    • have ties to insurance company or PBM middlemen as current or former high level employees or
    • are employed by organizations that rely heavily on insurer/PBM funding; or
    • have a history of producing healthcare cost analyses that fail to analyze middlemen and focus on reining in providers, despite evidence that such policies are ineffective.

What RI should do

Rhode Island legislative and executive branch officials should follow the lead of other states more aggressively reining in PBMs, including:

  1. Require PBMs to disclose information that results in effective ongoing state oversight and control of PBMs.
  2. Pursue appropriate civil and criminal investigations and actions.
  3. Carve out PBMs from Medicaid Managed Care Organization (MCO) contracts set to renew in April 2022.
  4. Restrict Insurer/PBM middlemen unjustified revenues, such as those arising from spread pricing, “claw backs,” “pharmacy steering,” discriminatory reimbursements, manufacturer rebates, and Section 340B transactions.
  5. Restrict harmful Insurer/PBM utilization management practices, such as, Prior Authorization, Step Therapy and Non-medical Drug Switching.
  6. Establish an unbiased research group to analyze ALL potential healthcare cost drivers, including private middlemen insurers and PBMs.

What you can do

Sign this petition to ask state legislators, OHIC and EOHHS to reform oversight and control over RI PBMs.

Linda L Ujifusa, Esq. is the Chair of the RI Healthcare Access & Affordability Partnership, and Dr. J. Mark Ryan is the Chair of Physicians for a National Health Program – RI Chapter.

https://upriseri.com…

Price Chaos at US Hospitals

Summary: The New York Times found huge price variations reported by hospitals across private insurers, generally far above Medicare prices. This causes inefficiencies, inequities, and financial distress for patients. These problems would be eliminated with a single set of negotiated prices.

Hospitals and Insurers Didn’t Want You to See These Prices. Here’s Why. New York Times, Aug 23, 2021, by Sarah Kliff and Josh Katz

This year, the federal government ordered hospitals to begin publishing a prized secret: a complete list of the prices they negotiate with private insurers.

… [M]any hospitals are simply ignoring the requirement and posting nothing.

But data from the hospitals that have complied hints at why the powerful industries wanted this information to remain hidden.

It shows hospitals are charging patients wildly different amounts for the same basic services: procedures as simple as an X-ray or a pregnancy test.

And it provides numerous examples of major health insurers—some of the world’s largest companies, with billions in annual profits—negotiating surprisingly unfavorable rates for their customers. In many cases, insured patients are getting prices that are higher than they would if they pretended to have no coverage at all.

Comment:

By Jim Kahn, M.D, M.P.H.

Excellent analyses and reporting by the New York Times highlight three very important facts about the now mandatory reporting by hospital of prices by payer:

  1. Most hospitals are ignoring the reporting requirements, either failing to report altogether or providing mostly empty or unnavigable data sets.
  2. For the limited price data available, variations are astoundingly wide across insurers, and self-pay patients may do much better than insurer cost-shares.
  3. The insurer prices are far above prices paid by Medicare – which are based on actual costs.

So what we have is price chaos. A profound morass of prices determined by myriad individual negotiations.

Why do we care? Because this chaos has severe consequences. It causes inequity – vast differences across individuals. It causes financial distress – for the unfortunate individual whose cost share is thousands of dollars. It causes inefficiency – setting those prices and implementing them takes a significant portion of the hospital and insurer operating budgets. It’s profligate for the system – prices far above actual (Medicare) costs. There is a huge financial conflict of interest that harms patients – hospitals and insurers jockey to gain profit, and patients lose out.

It also confirms, yet again, that the free market doesn’t work for health care. The price is hidden, so how can the consumer be price sensitive? Indeed, there is no unitary price for a specific product – a fundamental principle of market theory. Kenneth Arrow is turning in his grave.

There is another way, as other countries demonstrate.

A single payer, with a single set of negotiated prices.

No inequity, distress, inefficiency, profligacy, or excess profits.

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

‘Centuries of Inequities’ & the COVID Crisis

By Brenda Gazzar
Code Wack Podcast, August 23, 2021

Join Linda Rae Murray, MD, MPH, & Brenda Gazzar as they take a deep dive on the structural reasons for America’s fragmented healthcare system and what we can do to fix it.

Transcript

Welcome to Code WACK!, your podcast on America’s broken healthcare system and how Medicare for All could help. I’m your host, Brenda Gazzar.

How has the public sector in America been under attack? How can we better protect Black and other Americans who are disproportionately affected by COVID and chronic conditions? To find out, we spoke to Dr. Linda Rae Murray, a physician who spent 40 years in clinical practice helping the medically underserved. She retired in 2014 from her post as the chief medical officer for the Cook County Department of Public Health of the Cook County Health and Hospital System in Illinois. 

Welcome to Code WACK!, Dr. Murray.

Murray: My pleasure.

Q: Looking at the pandemic specifically, how did social, structural, and personal racial inequities combine to affect Black Americans?

Murray: So let’s back up a little bit. Pandemics also are an interaction between the environment and human beings and so we have had pandemics, certainly a number of them through my career as a physician, HIV probably being the most impactful. It is a pandemic whether people think of it like that or not and it’s not a surprise that we have the kind of pandemic we have now with the respirable, transmittable organism. We have known that this was going to happen. That is also related frankly to climate change and our interaction with other species on the planet. So let me just say that in the beginning.

And whenever you have a challenge like this, and you have inequities, then the people who do not have the same level of resources are more vulnerable. That’s exactly what that means. So if I own three or four homes, and I leave New York City and go to the Hamptons or some other place where you know the population isn’t as dense and I can order in my food. Obviously you have less contact, you have less problems and my income is not impacted. But if I’m an ordinary American white or black working, say, for a public transportation system or in a factory, then I don’t have those options. If I don’t go to work, then I don’t get paid, I can’t pay my bills, etc. So certainly for Native Americans, African Americans, Latinx people in this country, those realities of our daily lives explain the huge differences that we’ve seen in mortality for COVID, but we should be clear that as a rich country we’ve done very badly in this global pandemic, and our lack of a public health infrastructure, the fact that we’ve historically underfunded public health, and don’t understand the role of public health has meant that many Americans of all races have died unnecessarily from preventable deaths that wouldn’t have occurred if we had a functional public health system and a functional health system in the United States.

Q: Hmmm. Yeah. Why do you think there’s been such an attack on public health over the years?

Murray: This is an attack on American people. It’s an attack on “the public sector.” If you think back to your sort of ninth-grade Civics course, government is what we do collectively. You can have good government and bad government but whatever you have, it’s what we collectively as a society use to structure what’s going on and so, this constant attack on government as though that were the problem or the public sector creates a problem… Look during the last election where people, Republicans were chanting they wanted to keep (the) government out of their Medicare. So there’s a real cognitive dissonance there.

Medicare is in fact the best medical system we have running in the country. It is a governmental system and it does provide sort of a single-payer-like system to help take care of people. Most Americans that are involved with Medicare think it’s great so when it’s framed as though it’s not government, that’s a problem. Most Europeans think rich people are rich because they got lucky. Most Americans think rich people are rich because they worked hard. Now most rich people, especially of our age now, are rich because their parents were rich. They didn’t do nothing.

So I think that it means we have to really as Americans be better educated. We have to have some sense of history and understand how the country works. We can have disagreements on what you should do about it but you cannot continue, for example, to allow people to make unlimited profit and expect not to have fires year around in Europe and the United States and Canada, not to have these floods. This is a direct result of us running amok and thinking that we can continually without any change, maximize profit and still in the world, starvation and malnutrition are still the leading causes of death in the world.

Q: Wow. Can you talk about some of these other things that you alluded to, like housing, exposure to environmental hazards, living next to freeways, how those during the pandemic affected African Americans?

Murray: You can almost pick anything. I think the biggest single issue if I had to pick one that affects Blacks during the pandemic is the necessity of trying to go to work. And then if you’re unable to work, either because your plant got closed down, or because you’re sick or whatever,  the loss of any support. We did a little bit, which we think is amazing. We had some unemployment etc. but in other parts of the world, people were getting 80% or 90% of their regular income from the very beginning and in structures that already provide universal health care, etc.

So we’re a country that we don’t provide most of those social supports, and what we do provide is state by state. People forget we’re not approaching this pandemic as a nation. Let’s pretend for a minute that we were being invaded by another country. Okay? We would not allow every governor to decide how to fight that invasion. It’s another structural problem that goes to voting and everything else. The way our Constitution is set up, we have 50-plus public health departments in this country. Health care is a state power. It’s devolved to the states. They have the real legal authority to decide who can be a doctor, who can be a nurse, and what the response of governmental public health is.

So we’ve had 50 different responses, plus our territories, to this pandemic. We have not been able to have a coordinated response. Even though I personally, for example, thought that (Donald) Trump’s contribution to this pandemic was horrific, I don’t want to in any way excuse him, but even he had not been the president, our response would not have been adequate, because we have not invested in the public health infrastructure, we don’t have a coordinated approach, and we don’t think about these things in a rational way so at every point in our society, I don’t care whether it’s school systems, transportation, internet. You know there are major places in the country where people don’t have internet access, not just the rural areas.  I live in the southside of Chicago and our internet service over here on the southside is notoriously bad and slow compared to whiter areas of the city. So when you create centuries of inequities on all levels, then when you have a crisis, those inequities just get more exposed and often widened.

Q: Yeah, right, thank you. What about the role of the health insurance system in healthcare inequities?

Murray: If I had my way, we’d get rid of health insurance. Think about what that means. I think little kids understand this, but what does health insurance mean? Does it mean we’re making a bet that we won’t get sick? I mean, all of us are going to die. All of us, and most of us will not die before having some other malfunctions that cause us pain or discomfort, etc. So, we should just prepare to take care of people and do it in the best way possible. So I don’t know what health insurance…you mean as a funding mechanism, so then we should ask ourselves, is this a basic human right or not? I think health is a basic human right, and so the cost of doing that should be shared. In this country we spend more on medical care than anywhere else in the world several times over. We have more than enough money to take care of every man, woman, child, every dog and cat in the United States, and provide the highest quality medical care, but we have to have a system.

We have to build a system that is designed to do that, not to make profits. We have to build a workforce that looks like the population. There are fewer black men entering medical school today than when I graduated medical school, fewer in number. So that means we have to not allow that to happen.

Q: Um-hmmm. Why else do you support Medicare for All?

Murray: Well, why not? Mostly it’s because I believe that health care, medical care especially but health care, which is broader than medical care, is a basic human right and I’ve seen around the world other countries that have this principle — that it’s a basic human right — and try to structure services to address that do much better, have much better outcomes. So the United States, we may have the most expensive medical care system in the world but we have the worst health of any rich country in the world. I mean that’s the reality. Our system is a failure. You can see it whether you look at life expectancy,  maternal mortality, stroke. You can look at a whole range of things in comparison to other rich countries, other rich capitalist countries in the world and this has been true for a while — since the 50s —  and it continues to be true, and the gaps continue to widen.

Thank you, Dr. Linda Rae Murray.

Find more Code WACK! episodes on ProgressiveVoices.com and on the PV App. You can also subscribe to Code WACK! wherever you find your podcasts. This podcast is powered by HEAL California, uplifting the voices of those fighting for health care reform around the country. I’m Brenda Gazzar.

https://heal-ca.org…

The Financialization of “Non-Profit” Health Systems

Health Systems With Largest Private Equity Investments, Modern Healthcare, May 4, 2021

Largest Health System Investors in Hedge Funds, Modern Healthcare, May 4, 2021

Both charts are behind a paywall. From the charts:

Comment:

By David Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H.

We and others have noted the worrisome commercialization of health care, and particularly private equity firm purchases of physician practices, hospitals, and nursing homes.

But commercialization is also reflected in “non profit” health systems’ increasing focus on financial gain. Profits on patient care undoubtedly account for the vast majority of the surpluses they invest, as well as their executives’ multimillion dollar pay packages. This thirst for profit distorts priorities: mental health, primary care, and care for the poor are money losers, while delivering high tech cardiac and orthopedic procedures to affluent patients is the road to riches.

All payments for patients’ care should go for care, not to augmenting institutional wealth and power.

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Accountable care organizations don’t cut costs. It’s time to stop the managed care experiment

By Kip Sullivan and James G. Kahn, M.D., M.P.H.
STAT, August 23, 2021

For the last half-century, Congress has endorsed essentially the same approach to cutting health care costs, an approach that came to be called “managed care” by the mid-1980s. Based on the assumption that U.S. health care costs are double those of other wealthy nations because doctors order services patients don’t need, the solution is to “manage” doctors and provide financial incentives that nudge them to cut services.

The managed care approach has not only failed to cut costs, it has contributed to health care inflation by encouraging mergers and driving up administrative costs. The failure of the accountable care organization (ACO), a prominent iteration of managed care, illustrates the problem.

The ACO label was invented at a 2006 meeting of the Medicare Payment Advisory Commission (MedPAC). The concept was tested between 2005 and 2010 in the Physician Group Practice (PGP) Demonstration. In 2009, even as early results of the PGP project were showing that the accountable care concept wouldn’t work, Congress added provisions to the Affordable Care Act requiring the Centers for Medicare and Medicaid Services (CMS) to insert accountable care organizations into the traditional Medicare program.

ACOs are hospital-clinic chains that sign contracts with insurers (in Medicare’s case, with CMS) to share financial risk. That means an accountable care organization splits profits with CMS if profits are made and shares losses if losses occur. They work like this: CMS sets expenditure targets for accountable care organizations at the beginning of each year. At the end of the year, CMS sends ACOs that have spent less than their target a “shared savings payment.” In some programs, ACOs that exceed their target pay CMS a penalty.

In an article published online this month in the Journal of General Internal Medicine, we reviewed evaluations of all four of Medicare’s accountable care experiments that CMS has conducted since 2005. All four failed to affect Medicare spending; their impacts ranged from tiny savings of a few tenths of a percent to equally tiny losses. If we include in our calculations the costs that accountable care organizations incur in their futile efforts to reduce Medicare spending, such as contracting with insurance companies to manage risk and hiring more nurses, these organizations actually raise health care costs.

ACOs are supposed to work best for a population living with many chronic illnesses, such as Medicare enrollees. If these programs can’t cut Medicare costs, they clearly can’t cut costs for the whole country.

Why did accountable care organizations fail?

We see two main reasons for the failure of accountable care organizations: The diagnosis was wrong and the prescription was wrong.

The key assumption underlying the nation’s managed care experiment is that U.S. health care costs are high because Americans get too many medical services, and this overuse is caused by the fee-for-service method of paying doctors. Fee for service creates a financial incentive for doctors to order more tests and do more procedures, something doctors allegedly cave in to. That, anyway, was the diagnosis promoted in the early 1970s by proponents of health maintenance organizations, an early form of managed care, and it is the diagnosis offered today by ACO proponents.

In its June 2009 “Report to Congress,” for example, the Medicare Payment Advisory Commission claimed that the “ACO’s role is to create a set of incentives strong enough to overcome the incentives in the [fee-for-service] system to drive up volume….”

But the assumption that overuse is widespread, and that all overuse is caused by doctors caving in to fee-for-service incentives, is wrong. Over the last two decades, research has clearly demonstrated that overuse of medical care isn’t why health care costs are rising. Per capita health care costs in the U.S. are high compared with other nations because the prices at which medical services and drugs are sold is excessive.

In any sector of the economy, total spending is a function of price and quantity (or volume). Price times quantity yields total spending. American policymakers have focused on the quantity factor when they should have focused on the price factor. In a Health Affairs article aptly titled, “It’s The Prices, Stupid,” health policy expert Gerard F. Anderson and colleagues concluded that (the italics are ours) “the difference in spending [between the US and other countries] is caused mostly by higher prices for health care goods and services in the United States.”

Why are U.S. prices so high? Because incessant consolidation of its health care system gives those who sell medical services and drugs the power to raise prices. And the huge cost of administering the country’s stunningly complex health care system motivates sellers to raise prices: Excessive administrative costs account for 15% of the $4 trillion the U.S. spends annually on health care, or more than $2,000 per person.

The accountable care organization solution has failed not just because it addressed the wrong problem (overuse rather than excessive prices and inefficiency) but also because these organizations were never clearly defined. From the moment the ACO label was concocted by the Medicare Payment Advisory Commission at its November 9, 2006, meeting, accountable care organizations have always been “defined” in terms of the aspirations of its proponents.

The following “definition” by accountable care organization proponents Mark McClellan, a former CMS administrator and a former FDA commissioner, and colleagues is typical: “ACOs consist of providers who are jointly held accountable for achieving measured quality improvements and reductions in the rate of spending growth …. while caring for a defined population of patients.” Is it possible to be more vague than that? “Providers” are “held accountable” (by unidentified parties using unidentified means) for “measured improvements” (measured at an unknown cost to providers and the measurer) in the “cost and quality” of health care delivered to a (poorly) “defined population.”

In addition to being vague, the ACO proposition has failed because it rested on a false premise: doctors work primarily for money and can be induced to stop ordering unnecessary services if they could make money by doing so. But most physicians don’t work primarily for money. They are motivated to provide high-quality care, solve complex challenges, and see their patients prosper. Behavioral economists call these intrinsic motivations — and they are undermined by the monetary penalties and rewards deployed by accountable care organizations.

These twin defects in the ACO proposal — a wrong diagnosis along with a poorly defined and evidence-free prescription — have plagued the managed care experiment since health maintenance organizations were formalized in the 1970s. The widespread adoption of the cost-containment tactics pioneered by those organizations was the primary cause of an explosive growth in administrative costs and mergers, both of which drove up prices, that began in the late 1980s.

Health maintenance organizations, accountable care organizations, and other managed care “reforms” have not just failed — they have backfired, aggravating the problem they were supposed to solve.

It is long past time to abandon managed care. We should rely instead on lessons learned from other countries that have adopted single-payer systems, price controls, and universal coverage with uniform benefits. The results in cost control and longevity are impressive.

Kip Sullivan is a member of the advisory board of Health Care for All Minnesota. Dr. James G. Kahn is emeritus professor of health policy at the University of California San Francisco.

https://www.statnews.com…

24.4 million children – including millions with serious illnesses – had no or inadequate health coverage in 2019: Harvard study

New analysis finds the number of uninsured children rose to 6.3 million during the first three years of the Trump Administration, while the number with only partial coverage rose to 18.1 million

FOR IMMEDIATE RELEASE: August 23, 2021

Contact: Adam Gaffney, M.D., M.P.H., agaffney@cha.harvard.edu 
Steffie Woolhandler, M.D., M.P.H., swoolhan@hunter.cuny.edu
Clare Fauke, communications specialist, Physicians for a National Health Program,  clare@pnhp.org

In a study published Monday, researchers at Harvard Medical School and the City University of New York at Hunter College find that the number of uninsured children rose from 5.9 million to 6.3 million between 2016-19. During that same period, the number of children with inadequate coverage (a group often labeled “underinsured”) increased from 16.2 million to 18.1 million.

The study analyzed data on 128,621 children from the National Survey of Children’s Health. The researchers considered children uninsured if they lacked coverage at any point during the year. Children were classified as underinsured if their parent/guardian reported that their insurance never or only sometimes covered the services and providers they needed, or that it imposed unreasonable out-of-pocket costs—following the definition used in earlier studies.

The study found that the proportion of children with inadequate insurance (either uninsured or underinsured) was lower in ACA Medicaid expansion states (30.9%) than in non-expansion states (35.3%). Somewhat surprisingly, underinsurance was more common among privately-insured (34.8%) than publicly-insured (17.5%) children, likely reflecting the high copayments and deductibles in many private plans.

The researchers found that nearly one in three children with serious chronic illnesses or impairments were inadequately insured, including an average of 154,349 children with diabetes each year, 304,292 with heart disease, 1,902,839 with attention-deficit disorder, and 2,081,189 with asthma.

“Children’s health coverage was deteriorating even while the economy was booming,” noted Dr. Steffie Woolhandler, a primary care physician and Distinguished Professor at the City University of New York’s Hunter College and Lecturer at Harvard Medical School. “On the eve of the COVID-19 pandemic millions of American families couldn’t afford the care their children needed, increasing their medical and financial vulnerability,” Woolhandler added.

Dr. Adam Gaffney, a pulmonary and critical care physician at Harvard Medical School and the Cambridge Health Alliance, noted, “Much recent debate has centered on the critical need to expand coverage for older adults. Our findings indicate that there are also huge coverage gaps for kids. Some proposed reforms—like covering all children under Medicaid—would offer a partial fix. But we found that even kids with Medicaid often couldn’t get the care they needed. Only universal national health insurance reform can assure access to care for both kids and adults.”

“Medical Uninsurance and Underinsurance Among US Children: Findings From the National Survey of Children’s Health, 2016-2019,” Adam Gaffney, M.D., M.P.H.; Samuel Dickman, M.D.; Christopher Cai, M.D.; Danny McCormick, M.D., M.P.H.; David U. Himmelstein, M.D.; Steffie Woolhandler, M.D., M.P.H.; JAMA Pediatrics.

Published online first August 23, 2021

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization whose more than 24,000 members support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.

ACOs Fail to Save Medicare Money, Even With Do Overs

Promise vs. Practice: the Actual Financial Performance of Accountable Care Organizations, Journal of General Internal Medicine, August 13, 2021, by James G. Kahn and Kip Sullivan

We collect and compare financial performance data from all four CMS ACO programs from 2005 to 2018, examining net CMS cost. …

We found that overall, ACO programs roughly broke even from the CMS perspective. That is, when bonuses CMS paid to ACOs are subtracted from gross savings, the programs lost money or saved no more than a few tenths of a percent. …

[I]t is time to draw the ACO experiment to a close. We now have a decade of impressive empirical evidence demonstrating minimal if any benefit from ACOs of several designs. This model arose from laudable goals, drawing on theories of human and organizational behavior. However, reality as measured in formal evaluations failed to align with theory. ACOs have not worked for Medicare and will not work for the broader health care system. Indeed, CMS recently ended the Next Generation ACO program. However, CMS is launching another unproven program, direct contracting, to replace the open structure of traditional Medicare.

We propose instead turning to empirically proven tools used by other high-income nations to control health care costs. These include uniform benefits, simplified financing that dramatically reduces payer and provider overhead, removal of profit for primary insurance, regulation of pharmaceutical prices, and public control of capital investments.

Comment:

By Jim Kahn, M.D., M.P.H.

This article (full disclosure: I’m an author) settles once and for all the results of this CMS foray into financially incentivizing physician behavior. It didn’t work. This could have been predicted, and indeed was by HJM contributors Steffie Woolhandler and David Himmelstein in 2012, as cited in the article. But CMS wasn’t listening.

Now CMS is pursuing another unproven and misguided idea about how to manipulate health systems using managed care: direct contracting in traditional Medicare. I wrote about it in this space. It won’t save money, and it will shift health care dollars to managers and shareholders. Do we really need to wait another 15 years for the failure of another misguided experiment?

Let’s follow the advice of the authors: “uniform benefits, simplified financing…, removal of profit for primary insurance, regulation of pharmaceutical prices, and public control of capital investments.”

How do we get there? Single payer.

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.