PNHP

Medicare yet to save money through ACOs

Medicare yet to save money through ACOs

Medicare Yet To Save Money Through Heralded Medical Payment Model

By Jordan Rau and Jenny Gold
Kaiser Health News, September 14, 2015

A high-profile Medicare experiment pushing doctors and hospitals to join together to operate more efficiently has yet to save the government money, with nearly half of the groups costing more than the government estimated their patients would normally cost, federal records show.

The Centers for Medicare & Medicaid Services offers the lure of bonuses to health care practitioners who band together as accountable care organizations, or ACOs, to take care of patients. The financial incentives are intended to encourage these doctors, hospitals, nursing homes and other institutions to keep patients healthy rather than primarily treat illnesses, which is what Medicare payments traditionally have rewarded. ACOs that save a substantial amount get to keep a share of the savings as a bonus.

The Obama administration touts ACOs as one of the most promising reforms in the 2010 federal health care law. The administration set a goal that by the end of 2018, half of Medicare spending currently based on the volume of procedures a doctor or hospital performs will instead be linked to quality and frugality. But so far the ACO program generally has been a one-way street, with most doctors and hospitals happy to accept bonuses while declining to be on the hook for a share of any excessive costs run up by their patients.

Last year, Medicare paid $60 billion to 353 ACOs to take care of nearly 6 million Medicare beneficiaries. Some ACOs made significant strides in reducing use of hospitals and other costly resources. But patients at 45 percent of groups cost Medicare more than the government had projected based on their patients’ historic costs, records show. After paying bonuses to the strong performers, the ACO program resulted in a net loss of nearly $3 million to the Medicare trust fund, government records show.

Last year, 196 ACOs saved Medicare money, while 157 ACOs cost more than expected. Medicare ultimately did not realize any savings because it paid out bonuses to 97 ACOs, but only three of the costly ACOs had to repay Medicare for losses their patients incurred.

Jeff Goldsmith, a health industry analyst and professor at the University of Virginia who is a longtime ACO critic, said the ACO model is flawed. Consumers do not actively opt to participate in the ACOs and do not share in any savings, so they lack financial incentives to help keep costs down, he said. ACOs also have limited leverage to control the costs incurred by highly paid specialists such as surgeons and cardiologists. Patients in ACOS can still go to any doctor who accepts Medicare’s regular method of paying, in which they receive a set fee based on the nature of the service without regard to its outcome.

“Faux managed care is actually harder to do than real managed care,” Goldsmith said. The ACO program, he said, “has a bad enough reputation in the provider community that is not going to grow sufficiently to replace regular Medicare.”

Medicare Yet To Save Money Through Heralded Medical Payment Model

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Comment:

By Don McCanne, MD

Although the Obama administration continues to tout the successes of Medicare accountable care organizations (ACOs), according to this article using government data, the ACO program resulted in a net loss of nearly $3 million to the Medicare trust fund. Thus their headline: “Medicare Yet To Save Money Through Heralded Medical Payment Model”

Compared to what the nation spends on health care, $3 million is not a significant loss. The real tragedy here is that the Centers for Medicare & Medicaid Services (CMS) continues to move forward with this program as the be-all and end-all when it has already been proven to be a miserable failure as a means of significantly reducing health care spending.

Compare the $3 million loss with this program to the approximately $400 billion administrative savings that we could have under a single payer national health program – savings that could be used to actually improve quality and access in our health care system. In more visual numbers, we are comparing an excess spending on the Medicare ACO program of $3,000,000 with a single payer savings on administrative costs of about $400,000,000,000.

We should continue to encourage the ongoing efforts of those dedicated individuals in the health care delivery system who are improving quality and efficiency. But regarding financing, we should quit wasting our time and resources with the flawed Medicare ACO model and move forward with financing reform that really does work – a single payer national health program.

TenOne: Medicare-for-All National Student Day of Action on 10/1/15

By Joan Brunwasser
OpEd News, Sept. 13, 2015

My guest today is Scott Goldberg, a fourth year medical student at the University of Chicago’s Pritzker School of Medicine and a board member of Physicians for a National Health Program. Welcome to OpEdNews, Scott. 

JB: I understand you are helping to coordinate a national day of action, coming up soon. What can you tell us about it?

SG: Thank you for having me, Joan. Yes, I am one of the medical students from Students for a National Health Program (SNaHP) helping to plan the TenOne Medicare-for-All National Student Day of Action. SNaHP is the student section of the national organization, Physicians for a National Health Program, which has around 20,000 doctors and students who advocate for single payer health reform. The idea for TenOne came out of the SNaHP annual summit last February in Chicago. It was our 4th and largest summit thus far, with over 170 students in attendance. We had been inspired by the widespread involvement of students in the White Coats 4 Black Lives die-in that fall and we wanted to do something similar to energize and strengthen the student single payer movement. In short, TenOne is a nationwide action of medical students and allies to raise awareness about the failings of our private health insurance system and what we need to do to fix it — which is to expand and improve Medicare to all. 

JB: Before we get to the nitty gritty of the October action, can you tell us why single payer is so important to you and your fellow medical students? 

SG: Well, for me, I became committed to single payer in 2009 after hearing a talk by Dr. David Himmelstein, one of the co-founders of PNHP. He presented so much evidence that national health insurance, as practiced particularly in Canada, is the most efficient, economical, and just way to provide high-quality, affordable, universal health care access. And that the United States is the only industrialized country in the world, despite our vast wealth, that doesn’t have some form of universal health insurance. But it wasn’t until I began medical school, and started working in the hospital, especially during my third year clinical rotations, that I saw first-hand how devastating our system is on patients’ lives. I remember one Spanish-speaking woman who was unable to receive a lung transplant at our hospital because we weren’t “in-network.” We had to send her to another hospital after developing a trusting relationship with her. I’ve seen patients die because they couldn’t get the care they needed in time. This just does not happen in other first-world countries. So I’m sure my fellow medical students working on this issue feel the same way as I do — that no person, regardless of socioeconomic status, race, ethnicity, or whatever, should be denied something as fundamental to human life as medical care. 

JB: Everything you say makes perfect sense to me, Scott. I covered the medical student die-in when it happened and it was an amazing statement. What kind of participation are you getting for this current action day? 

SG: SNaHP now has 43 chapters at medical schools across the country. I think this is double the number just four years ago. For TenOne, we have 30 chapters participating as of now. Many of these chapters will be holding actions during the day including teach-ins and rallies. At night, all chapters will be holding a candlelight vigil remembering the approximately 25,000 people that die each year due to uninsurance and the millions more who suffer due to underinsurance. In cities like New York, Philadelphia, Chicago, Los Angeles, and Boston, a number of chapters from different schools will be working together to host one large nighttime action. Also, TenOne is sponsored by a number of other national medical student organizations including American Medical Student Association, Latino Medical Student Association, White Coats 4 Black Lives, Universities Allied for Essential Medicine, and Pre-health Dreamers. I can’t think of another student-led nationwide action for single payer that has been done before. 

JB: I’m curious if any of the medical schools push back against these single payer actions. Are any students fearful that their participation might affect their careers going forward? 

SG: In my three years since starting a student chapter of PNHP, I’ve never had any push back from my medical school. In fact, I think our chapter is the most active on campus and has widespread support from the student body. Many of the faculty and administrators on campus support national health insurance (NHI) and are encouraged by our dedication to the cause. I’ve never heard of any other schools pushing back against single payer actions, but I can’t say definitively if there have been. 

I think some medical students may be anxious about throwing themselves into single payer advocacy for fear that it may affect their careers somehow. But I can say, from my own experience, that it has not affected my career thus far. And there are examples of outspoken faculty members on campus who don’t face repercussions for their beliefs. This idea that speaking out for something as fundamental and urgent as universal health care is threatening to your career is something we need to dismiss. Advocating for single payer is not a Democratic or Republican issue. It is at the core of what it means to be a doctor, which is doing everything in your power to help your patients. 

JB: I’m glad you haven’t experienced or witnessed any push back but I also understand that many students have taken out huge student loans. And that factor can affect everything, including decisions like participating or not in an action like this.  What kind of press coverage have you arranged for TenOne?  I ask because if you don’t get enough coverage, isn’t it like the proverbial tree falling in the forest with no one around to hear? 

SG: It’s true, student loan debt is a major problem. In fact, in countries like Canada, medical education is free. In HR 676, the house bill that would establish national health insurance, there is a provision making medical education free. But the idea that student loan debt affects one’s decision to participate in actions is not something I’ve ever heard from my interactions with other students across the country. As medical students, we are paying a lot of money to schools and so they want to support us in whatever we do. 

As for press coverage for TenOne, we’re talking with national media outlets like OpEdNews! We also have upcoming interviews with other outlets like The Union Edge. We have national and local press coverage lined up for TenOne. And I think the power of this event is not just to generate media attention. No nationwide action like this has ever been done before. We are raising awareness, empowering students, and generating the basis for a broad-based movement for single payer. 

This is not a one-off event just to attract media attention. This is the first in a series of actions to build a movement capable of achieving NHI. 99% of Americans suffer due to expensive, inadequate health care and we are bringing them into the movement. Single payer reform would be the greatest social and economic reform in this country’s history, and so it will take time, energy, and a national movement to achieve. We often overlook that students have been at the forefront of social movements throughout history. The Civil Rights Movement in America was started by college students, specifically the Student Nonviolent Coordinating Committee. 

JB: Again, quite true. Anything you’d like to add before we wrap this up? 

SG: I hope those who read this go to student.pnhp.org to find a TenOne event in their area to attend. This day of action is led by students, but meant for everyone! Also, I’d like to encourage anyone who reads this to start having conversations with their friends, family, colleagues, whomever about the need for single payer health care. Canada passed national health insurance in the 1970s, but activists began having small, informal gatherings in their homes about reform as early as the 1910s. Although we face serious barriers to passing NHI including the enormous wealth of the health insurance and pharmaceutical industries, a majority of Americans currently support government-funded, privately delivered health care. We have the numbers, we just need to unify ourselves. 

JB: Thanks so much for talking with me, Scott. Looking forward to TenOne and its aftermath!

Joan Brunwasser is senior editor at OpEd News.

http://www.opednews.com/articles/TenOne-Medicare-for-All-N-by-Joan-Brunwasser-Action-Alerts_Activists_Awareness_Chicago-150913-440.html

CMS’s low expectations for ACOs, though not admitting it

Medicare’s Vision for Delivery-System Reform — The Role of ACOs

By Hoangmai H. Pham, M.D., M.P.H., John Pilotte, M.H.S., Rahul Rajkumar, M.D., J.D., Elizabeth Richter, M.A., Sean Cavanaugh, M.P.H., and Patrick H. Conway, M.D. (all from the Centers for Medicare and Medicaid Services)
The New England Journal of Medicine, September 10, 2015

Earlier this year, the Department of Health and Human Services announced the goals of tying 30% of Medicare payments to alternative payment models by the end of 2016 and 50% by the end of 2018. That move was reinforced by the Medicare Access and CHIP Reauthorization Act of 2015, which replaced the sustainable growth rate formula for calculating physician payments with a Merit-based Incentive Payment System (MIPS) that consolidates and incorporates key components of the Physician Quality Reporting System, the Physician Value-Based Payment Modifier, and the Medicare Electronic Health Records Incentive program for eligible professionals. The MIPS will adjust payment rates on the basis of physicians’ performance on quality measures, resource use, clinical practice improvement activities, and meaningful use of electronic health records. Eligible professionals participating in eligible alternative payment models could receive a 5% lump-sum incentive payment each year from 2019 through 2024. If they meet program criteria, accountable care organizations (ACOs) could thus be central to Medicare’s strategy for delivery-system reform

Three principles guide CMS as we seek to further improve ACO policies and programs.

First is the importance of maintaining an ongoing test bed of ACO models through the Center for Medicare and Medicaid Innovation.

The second principle is that a concrete strategy for expanding successful models should be based on our testing experience.

The third principle is that ACO initiatives require multiple, distinct “tracks” to engage different types of beneficiaries and providers. Understanding the market’s diversity led to the conclusion that experienced ACOs willing to take financial-performance risks could be allowed to handle more flexible payment structures such as capitation or specific payment waivers but that less-experienced ACOs may take longer than anticipated to establish core capabilities in coordinating care for a population. Those organizations need protection from financial-performance risk during the development phase and, sometimes, direct capital support such as through the ACO Investment Model.

It’s also important to understand what factors do not drive the CMS approach to ACO policies. Our programs are not premised on the expectation that ACOs should evolve into Medicare Advantage health plans. Medicare beneficiaries are the ones who decide to enroll in Medicare Advantage or remain in traditional Medicare. Some now also proactively select an ACO as part of traditional Medicare. We believe that all beneficiaries deserve access to high-quality, coordinated care regardless of which program they choose and that provider organizations should decide which lines of business are most appropriate for them. Some may choose to serve patients as both an ACO and a health plan; others may choose one path or the other or take advantage of other alternative payment models such as bundled payments. We are therefore striving to maintain comparable business cases for ACO initiatives and Medicare Advantage, but some disparities in program requirements will persist because of statutory provisions and other factors inherent in the programs (for example, actuarial approaches must acknowledge that a health plan can choose the counties where it offers a Medicare Advantage product, but an ACO is constrained by the bricks and mortar of its available providers and facilities and cannot easily change location).

CMS policies are also not premised on the expectation that for an ACO program to be successful, all ACOs in it must succeed financially. Design elements certainly shape the potential for ACOs to earn shared savings, but ACOs also vary widely in their capabilities and decisions regarding staffing, infrastructure, and specific interventions. We judge the performance of initiatives on the basis of whether our policies appropriately reward good quality of care and savings to Medicare — results that might be achieved only by the most prepared subset of ACOs. We believe it’s important that with experience, ACOs be able to settle into the payment arrangements that best match their readiness and appetite for risk.

Finally, although CMS has implemented policies to promote improvement in ACO performance, we don’t believe that all ACOs can consistently improve on their spending performance over the long run or that it would be ideal for beneficiaries if spending continually declined. There are challenges, however, in setting national policies given large geographic disparities in practice patterns, Medicare spending, and beneficiary needs. We’re therefore emphasizing rewarding improvement in spending performance in these early years of ACO initiatives and aim to exercise sound judgment regarding the appropriate pace and approach to setting spending benchmarks over the long term. Ideally, our strategy would gradually shift from rewarding only spending reductions to also rewarding absolute spending levels, as in the Next Generation ACO Model, while considering the level of ACO penetration in Medicare and the degree of spending improvement — and do so without imparting sudden shocks to health care markets or exacerbating inequities.

We look forward to finding more strategies to help ACOs succeed faster, spur participation in more communities, combine multiple payment approaches for providers, and strengthen the business case for ACOs. Providers should compare ACO earnings not with what they could earn in today’s fee-for-service payment environment but with what they could expect to earn in the future if they didn’t participate in such alternative payment models. Although the challenges are protean, so are the opportunities, and we look forward to continued partnership with patients and providers.

http://www.nejm.org/doi/full/10.1056/NEJMp1507319

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Comment:

By Don McCanne, MD

We are moving full steam ahead with delivery reform through alternative payment models in which accountable care organizations (ACOs) are anticipated to play a major role. That is why it is important to read and understand the vision that our CMS bureaucrats have for the future of Medicare.

A quick read indicates that we are well on our way to pretending that we are paying for value rather than volume through ACOs. But a careful read of the full, unedited article suggests that CMS has really low expectations for ACOs, even though their rhetoric does not suggest that.

We are headed in the wrong direction. We need a single payer national health program if we expect to increase efficiency and value in our delivery of heath care.

The way our CMS bureaucrats are clogging up our Medicare program should make us consider using all caps for “improved,” as in “IMPROVED Medicare for All.” Or just simply call it “single payer” – that’s a more precise label anyway.

Prescription Drug Affordability Act of 2015

The Prescription Drug Affordability Act of 2015

Statement by Sen. Bernard Sanders
September 10, 2015

Thank you all for coming. And let me say a special thanks to Congressman Elijah Cummings.

No one in Congress has done more to lower the outrageously high price of prescription drugs than Congressman Cummings and I thank him for his leadership not only on this issue, but so many others in the House.

We are here today to talk about a huge issue of consequence to the American people. And, that is the fact that the American people pay, by far, the highest prices for prescription drugs in the entire world.

In the richest country in the history of the world, Americans should not have to live in fear that they will die because they cannot afford to take the life-saving medication they need.

The American people should not have to go without the medication they need because Congress does not have the courage to stand up to the prescription drug industry.

The time has come to say very loudly and very clearly that enough is enough. The greed of the pharmaceutical industry is killing Americans. It has got to stop.

It is time for the United States to join the rest of the industrialized world by implementing prescription drug policies that work for everybody, not just the CEOs of the pharmaceutical industry.

That’s exactly what the legislation that Congressman Cummings and I will be introducing today begins to do.

Specifically:

1. This bill requires Medicare to use its bargaining power to negotiate with the prescription drug companies for better prices – a practice that was banned by law. Not only would this substantially reduce the prices seniors pay for drugs, it could save Medicare over half a trillion dollars over the next decade.

2. This bill would allow individuals, pharmacists, and wholesalers to import prescription drugs from licensed Canadian pharmacies where drug prices are 40 percent lower per person than they are in the U.S.

3. This bill would hold the pharmaceutical industry accountable when they defraud the American people. Today, nearly every major pharmaceutical company has been convicted of either civil or criminal fraud. And even though the Justice Department has won suits requiring them to pay billions in fines, the prescription drug companies simply treat these fines as the cost of doing business. Our bill would say that if a drug company is convicted of fraud, they will lose their market exclusivity on the drugs they sell.

4. This bill would end “pay for delay” – a practice in which brand name prescription drug companies pay other companies not to manufacture cheaper generic drugs. The FTC has estimated that pay for delay is costing consumers and taxpayers about $3.5 billion a year in higher drug prices. That is unacceptable.

ïżŒ5. This bill would demand more transparency from drug companies, who have been concealing the true cost of their research and development.

Let me just conclude my remarks by saying this. I know how hard it will be to pass this legislation. I know how hard it will be to defeat the prescription drug industry. In fact, to my knowledge the prescription drug industry has never lost a battle on Capitol Hill.

But at a time when a huge majority of the American people want us to take action, when 74 percent of Republicans and 93 percent of Democrats, want the federal government to negotiate with the drug companies to lower prices, the time has come to say enough is enough. We cannot let the drug companies continue to rip-off Americans who are suffering any longer.

http://www.sanders.senate.gov/download/prepared-remarks-on-the-prescription-drug-affordability-act-of-2015

Prescription Drug Affordability Act of 2015 (Bill number pending): http://www.sanders.senate.gov/download/text-of-prescription-drug-affordability-act-of-2015

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Comment:

By Don McCanne, MD

When we enact an improved Medicare for all, it would be important for Medicare to have the power to negotiate better drug prices with the prescription drug companies. The Prescription Drug Affordability Act of 2015 would establish that principle, clearing one more hurdle on our way to health care justice for all.

Are Medicare Pay-for-Performance Benefits Worth the Risk?

By Jacqueline DiChiara
RevCycle Intelligence, Sept. 10, 2015

Medicare pay-for-performance (P4P) incentives are inadvertently diverting money away from those financially aching hospitals primarily serving minorities and the economically disadvantaged to instead inflate the revenues of those hospitals serving a more financially prosperous population of patients. Such is confirmed by recent research from David U. Himmelstein, MD, FACP, Lecturer in Medicine at Harvard Medical School and Professor at the City University of New York School of Public Health at Hunter College, and Steffie Woolhandler, MD, MPH, FACP, Lecturer in Medicine at Harvard Medical School, Professor in the CUNY School of Public Health at Hunter College, and Adjunct Clinical Professor at Albert Einstein College of Medicine.

“Medicare’s [P4P] program, which does not adjust for patients’ socioeconomic status, assumes that bonuses and penalties will prod substandard providers to improve or see their patients migrate to higher-quality options,” state Himmelstein and Woolhandler. “However, when quality problems are due to a hospital’s financial distress and patients cannot go elsewhere, penalizing low scorers may well punish patients and exacerbate quality disparities. Prescribing a starvation diet for safety-net hospitals that are strapped for cash and are quality challenged makes no sense unless the goal is to close them.”

Medicare pay-for-performance incentives

Ask Himmelstein and Woolhandler, “Are P4P’s benefits worth the risk? The evidence is surprisingly slim. A few small, randomized, controlled trials in outpatient settings have shown improvement on surrogate measures, but most have found no improvement, and none have demonstrated reductions in death or disability rates.”

Hospital administrators “game” P4P arrangements by coercing physicians to embellish diagnoses to beef up their medical outcomes, confirm Himmelstein and Woolhandler. As RevCycleIntelligence.com recently reported, Himmelstein and Woolhandler additionally confirm hospitals are steadily reclassifying Medicare patient readmissions as “observation stays” or delivering care for recurring Medicare patients in the Emergency Room (ER) to thwart Medicare’s financial penalties. 

“Researchers who used external data to audit Medicare Advantage plans’ ‘safe prescribing’ quality reports discovered that 95% of plans overstate their scores, pushing down the rankings of the 5% who told the truth,” confirm the authors. “At a hospital where we worked, the administration responded to poor scores for risk-adjusted mortality rates by hiring coding consultants, even as it was laying off clinical staff. Within 6 months, risk adjusted mortality rates improved to better than expected and Medicare reimbursement climbed $3 million. Soon after, administrators made physician attendance at coding-coaching sessions mandatory,” they explain.

The recent sustainable growth rate (SGR) fix, they add, will associate 18 percent of Medicare physician fees to cost and quality performance metrics. P4P pressures will “intensify,” they say, as confusion escalates with paperwork befuddlement involving clarity of costs and quality deficits.

Indeed, as Himmelstein confirmed to RevCycleIntelligence.com in a personal interview, paperwork issues are a substantial concern requiring active addressing within the healthcare space: one-third of the total healthcare dollar goes toward paperwork and bureaucracy, he explained. “We are wasting an enormous amount of money that ought to go to healthcare on paperwork 
 [which is] an extraordinarily inefficient way of deploying resources,” Himmelstein said.

In addition to the notion of possible paperwork chaos, maintaining the integrity of physicians’ work is perhaps now in question, the authors add. “Tethering physicians’ rewards to box checking and redundant documentation risks both substituting insurers’ priorities for patients’ goals and demoralizing physicians. Pay for performance can crowd out intrinsic motivation that keeps us doing good work even when no one is looking,” the authors state. “A growing body of behavioral economics research indicates that when preexisting motivation is high, monetary incentives often undermine performance on complex cognitive tasks – particularly when incentives are contingent on specific task performance or associated with surveillance, deadlines, or threats,” they add.

The concept of paying for quality is an attractive option, they confirm. However, the modification of policies “that have been proven nowhere” merely means millions are in severe danger of risk, they maintain.

http://revcycleintelligence.com/news/are-medicare-pay-for-performance-benefits-worth-the-risk

Nothing Can be Gained in a Broken System

Courage Campaign’s Paul Y. Song shares his journey to pursue justice in the U.S. health care system

By Paul Y. Song, M.D.
Inheritance, September 2015

In 1991 then United States Surgeon General C. Everett Koop asked me and my fellow graduating medical students to raise our right hands and repeat the Hippocratic Oath.

“I will follow that system of regimen which, according to my ability and judgment, I consider for the benefit of my patients, and abstain from whatever is deleterious and mischievous.”

In the nearly 25 years since then, and despite all of the amazing medical advances, I have found our medical system to be far too deleterious and mischievous for my patients. I have witnessed too many patients of mine go bankrupt from medical bills while cancer ravaged their bodies. I have seen too many of my patients patients being denied necessary tests and treatment by insurance companies. And I have seen too many uninsured or Medicaid patients with advanced incurable cancer simply because they did not have timely access to a doctor.

In his 1966 speech to the Medical Committee of Human Rights, Martin Luther King, Jr. said, “Of all the forms of inequality, injustice in health is the most shocking and inhuman.” Sadly this inequality is worse now than it was back then.

Even with the positive strides achieved by the Affordable Care Act, we still have a health care system in which 45,000 people die each year in the U.S., simply because they are uninsured. We still have a country where 70 percent of all uninsured come from communities of color. Despite the fact that we spend twice as much per person on health care than any other industrialized nation, we still have a system where nearly 1.2 million people with insurance go bankrupt each year due to a major medical illness. 

We still have a health care system that does not cover our undocumented brothers and sisters. And we still have a system where too many doctors perform unnecessary medical procedures, too many hospitals charge obscene fees for goods and services, and too many pharmaceutical companies gouge patients for their lifesaving drugs.

In the meantime, the biggest for-profit health insurers continue to unfairly raise premiums, make record profits, and watch their stocks hit all-time highs, all the while maintaining a perverse system that only makes money by denying care.

I found myself spending more and more time on the phone with insurance companies on behalf of my patients, fighting for the care they deserved and needed. I saw the emotional and economic toll that cancer took on my patients. I witnessed far too many of my patients sacrificing their lifesavings, selling their longtime homes, and making painful decisions about what to give up in order to pay for their rapidly escalating premiums, co-pays, medications, and deductibles.

I reached out to pharmaceutical companies to see if my patients could get samples or greatly discounted drugs, and I worked closely with social workers to find suitable support when patients reached their economic limits.

But I realized that for every one patient that I could help, there were thousands elsewhere that were falling through the cracks.

While my medical practice afforded me a very comfortable life, I felt a lot like Solomon when he wrote Ecclesiastes.

“Yet when I surveyed all that my hands had done and what I had toiled to achieve, everything was meaningless, a chasing after the wind; nothing was gained under the sun” (Eccl. 2:11 NIV).

All my own financial and professional success could not mask the overall brokenness I saw daily in our health care system.

I was becoming more and more depressed, seeing the daily toll that this broken system was taking on my patients and the countless others who could not even see a doctor. I came across this story:

“On a street corner I saw a cold shivering girl in a thin dress, with no hope of a decent meal. I got angry and said to God: ‘Why did you permit this? Why don’t you do something about it?’ God replied, “I certainly did something about it. I made you.”

It was then that I realized I could no longer silently participate in this broken system without trying to make a real difference. For the first time, I felt a real calling to fight for a better health care system for all. In the years since, I have dedicated my life to doing just that.

Like someone trying to find a cure for cancer, I learned as much as I possibly could about health care in the U.S. and health care in all the other major industrialized countries. I began this study with no preconceived notions, but simply immersed myself in copious amounts of published data and studies and sought out opinions from numerous leading health care leaders.

After this extensive education, I felt very comfortable speaking throughout the U.S. about what was wrong with our health care system and how we could improve it. I immediately found myself at odds with most in the medical community, who were quick to defend the status quo, including Dr. Ron Paul, who I debated on Larry King Live in the run-up to the Affordable Care Act. 

Many do not want any change that will threaten their way of life, even if it will improve the lives of countless others; this is unfortunate.

“Learn to do right; seek justice. Defend the oppressed” (Isaiah 1:17 NIV).

I believe that our current health care system oppresses far too many for us not to do anything. I also think that Acts 2:44-45 shows that we as a society are all in this together:

“All the believers were together and had everything in common. They sold property and possessions to give to anyone who had need” (NIV).

In the years since I answered this call, I have spoken at countless health care conferences, to numerous community groups, and have emerged as a voice to counter those who not only think nothing is wrong, but also that we have the best health care system in the world. I was fortunate to serve as a visiting fellow on health care policy in the California Department of Insurance and was a leading voice in trying to achieve insurance rate regulation in California.

I have always believed that we are defined as a society by how we care for the least among us as Matthew 25 describes.

That is why I continue to fight for those without a voice, especially when it comes to health care.

Two years ago, I took over as the leader of the Courage Campaign, an online organization with over 1 million members who advocate and fight for a more progressive California and nation. I serve on a purely voluntary basis, which has forced me to cut back on my hours as a physician. And while I now make less as a doctor than I did at any point of my career, I feel that I am also helping more people than ever before, and for this I feel extremely blessed to do what I do.

I will not hesitate to call out those who hijack facts to defend their ideology and especially those who distort what I believe God calls us to do.

I pray that more and more brothers and sisters will feel a similar calling. There is still far too much health care injustice to remain silent.

Paul Y. Song, M.D., is a physician, healthcare activist, and biotechnology executive. He is on the faculty at the Samuel Oschin Cancer Center at Cedars Sinai Medical Center and is the Chief Medical Officer of ATGen Global. He is also the executive chairman of the Courage Campaign, a progressive online organization, and the co-chair for a Campaign for a Healthy California.

PNHP note: Dr. Paul Song is a member of the national board of Physicians for a National Health Program.

http://www.inheritancemag.com/issues/35/nothing-can-be-gained-in-a-broken-system

The truth on the distribution of HSAs

Health Savings Accounts: Growth Concentrated Among High-Income Households And Large Employers

By Lorens A. Helmchen, David W. Brown, Ithai Z. Lurie and Anthony T. Lo Sasso
Health Affairs, September 2015

Between 2005 and 2012, the share of employers whose employees had health savings accounts (HSAs) and the share of employees working at these employers grew more than tenfold. High-income and older tax filers both established HSAs and fully funded their HSAs at least four times as often as did low-income and younger filers.

Although suggestive, the evidence to date on the take-up of HSAs has been limited to surveys, which rely on modest samples of several thousand individuals or employers that have chosen to participate. In this study we examined US tax records to offer a definitive depiction of the growth and ownership patterns of HSAs.

http://content.healthaffairs.org/content/34/9/1594.abstract

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Comment:

By Don McCanne, MD

Although there are innumerable surveys available on health savings accounts (HSAs), this is the definitive word since it used actual US tax records of filings on these tax-advantaged accounts. We can now say with absolute certainty that four times as many high-income and older tax filers both established and fully funded their HSAs as did low-income and younger filers.

This is what was predicted by many of us since the tax expenditures associated with these accounts (taxes not paid since the contributions are deducted from taxable income) are regressive tax policies benefiting higher income individuals with little or no benefit for those with low incomes. It is patently unfair to use our tax funds to subsidize the rich but not the poor.

But there is another consequence of HSAs that has a much greater negative impact. That is that an HSA must be combined with a high-deductible health plan. Many studies have confirmed that these high-deductible plans have left many middle- and low-income individuals and families underinsured. They face financial hardship should they need health care, because of the high out-of-pocket expenses associated with these insurance plans that shift health care costs from the insurers to patients in need.

Although HSAs are designed to pay for care received before reaching the deductible, this study confirms that the HSA accounts of lower-income individuals contain few if any funds at all. An empty HSA account doesn’t open doors to health care.

Another annoying feature is that these accounts can be used for retirement expenses once reaching age 65. What is fair about supporting these accounts for wealthier individuals with our tax expenditures that lower income individuals do not receive, even if they do have some funds in their accounts? Because of these regressive tax policies, the charge that they work for the wealthy and healthy but not the sick and poor really is true.

Many conservatives recognize that we need public policies to help support those with lower incomes. It is difficult to reconcile that view with their current push to expand the use of HSAs that are designed primarily to benefit the rich.

This issue would go away if we enacted an improved Medicare for all.

Safety-net hospitals are inappropriately penalized by P4P programs

The Financial Effect of Value-Based Purchasing and the Hospital Readmissions Reduction Program on Safety-Net Hospitals in 2014

By Matlin Gilman, BA; Jason M. Hockenberry, PhD; E. Kathleen Adams, PhD; Arnold S. Milstein, MD; Ira B. Wilson, MD, MSc; and Edmund R. Becker, PhD
Annals of Internal Medicine, September 7, 2015

Background:

Medicare’s value-based purchasing (VBP) and the Hospital Readmissions Reduction Program (HRRP) could disproportionately affect safety-net hospitals.

Measurements:

Safety-net hospitals were defined as being in the top quartile of the Medicare disproportionate share hospital (DSH) patient percentage and Medicare uncompensated care (UCC) payments per bed. The differences in penalties in both total dollars and dollars per bed between safety-net hospitals and other hospitals were estimated with the use of bivariate and graphical regression methods.

Results:

Safety-net hospitals in the top quartile of each measure were more likely to be penalized under VBP than other hospitals (62.9% vs. 51.0% under the DSH definition and 60.3% vs. 51.5% under the UCC per-bed definition). This was also the case under the HRRP (80.8% vs. 69.0% and 81.9% vs. 68.7%, respectively). Safety-net hospitals also had larger payment penalties ($115 900 vs. $66 600 and $150 100 vs. $54 900, respectively). On a per-bed basis, this translated to $436 versus $332 and $491 versus $314, respectively. Sensitivity analysis setting the cutoff at the top decile rather than the top quartile decile led to similar conclusions with somewhat larger differences between safety-net and other hospitals. The quadratic fit of the data indicated that the larger effect of these penalties is in the middle of the distribution of the DSH and UCC measures.

From the Discussion

Although the payment penalties that safety-net hospitals are receiving under VBP and the HRRP were usually small, supplemental analysis reveals that approximately 1 in every 10 safety-net hospitals in the top quartile of DSH definition are receiving payment rate reductions totaling 1.0% or greater in 2014. Because safety-net hospitals are known to have had historically low margins even before the 2008 economic recession, losing 1.0% or more of Medicare inpatient payments could have a significant effect on these hospitals’ financial conditions for 2 reasons. First, if they were to receive persistent annual reductions in payment rate despite quality improvement efforts, the accumulation of these small penalties on overall financial position would further disadvantage these hospitals. Second, the transition from DSH to the Medicare UCC payments mandated under the ACA will mean less revenue as the proportion of uninsured patients decreases and mandated reduction in the total pool of funds increases. As such, it is not clear that these reductions will be fully offset from revenue by newly insured patients covered by the ACA’s insurance expansion, given earlier evidence from insurance expansions in Massachusetts. When safety-net hospitals close, patients in these communities are negatively affected, and close monitoring of the financial condition of these institutions is warranted as the stakes in VBP and the HRRP increase.

http://annals.org/article.aspx?articleid=2434617

***

Collateral Damage: Pay-for-Performance Initiatives and Safety-Net Hospitals

By Steffie Woolhandler, MD, MPH and David U. Himmelstein, MD
Annals of Internal Medicine, September 7, 2015

In this issue, Gilman and colleagues document a side effect of Medicare’s pay-for-performance (P4P) initiatives: They divert money from underresourced safety-net hospitals that are mainstays of care in many minority communities to hospitals serving more affluent patients.

Medicare’s P4P program, which does not adjust for patients’ socioeconomic status, assumes that bonuses and penalties will prod substandard providers to improve or see their patients migrate to higher-quality options. However, when quality problems are due to a hospital’s financial distress and patients cannot go elsewhere, penalizing low scorers may well punish patients and exacerbate quality disparities. Prescribing a starvation diet for safety-net hospitals that are strapped for cash and are quality challenged makes no sense unless the goal is to close them.

Are P4P’s benefits worth the risk? The evidence is surprisingly slim. A few small, randomized, controlled trials in outpatient settings have shown improvement on surrogate measures, but most have found no improvement, and none have demonstrated reductions in death or disability rates.

Safety-net providers spend less on administration and may lack the administrative resources to keep up in the gaming arms race — the health care equivalent of teaching to the test. Expensive computer systems and consultants facilitate aggressive upcoding and meticulous documentation of comorbid conditions that can exaggerate patients’ severity of illness and inflate risk-adjusted quality scores. Costly administrative efforts can also ferret out exceptions and ensure that boxes are checked (for example, “Yes, we counseled against smoking”), increasing process-of-care scores, regardless of whether they improve care.

Tethering physicians’ rewards to box checking and redundant documentation risks both substituting insurers’ priorities for patients’ goals and demoralizing physicians. Pay for performance can crowd out intrinsic motivation that keeps us doing good work even when no one is looking.

Paying for quality has strong intuitive appeal. However, as with other medical interventions, intuition may mislead, and adopting everywhere policies that have been proven nowhere puts millions at risk for unintended side effects.

http://annals.org/article.aspx?articleid=2434618

***

Comment:

By Don McCanne, MD

Now that the Affordable Care Act has withstood constitutional challenges and five years of implementation, attention has turned to efforts to improve quality while controlling costs – paying for quality rather than volume through various pay-for-performance schemes (P4P) including Medicare’s value-based purchasing (VBP) and the Hospital Readmissions Reduction Program (HRRP). Those closely following the reform process realize that such efforts to date have provided only negligible, if any, improvements in quality and cost containment.

Today’s report shows that these programs also can have adverse consequences. Because of factors such as chronic underfunding, high pressures placed on clinical and administrative staff, and patient populations that are less capable of interacting efficiently with the health care system, safety-net hospitals do not and are not expected to perform well on these measures. As a result, these underfunded institutions suffer further financial penalties which can only compound their difficulties in trying to meet the needs of the vulnerable populations they serve.

The lesson here is that we are diverting our resources and talent to efforts that will fall far short of our goals on quality and affordability, primarily because we passively accept the fact that our dysfunctional system under the Affordable Care Act is here to stay. Instead we should be working on introducing a system that actually will meet our goals, not only for quality and affordability, but also for universality, efficiency, comprehensiveness, accessibility, and, especially, equity – a single payer national health program.

Medicare remains model for universal health care

By William R. Reed, M.D.
Lake Geneva (Wis.) Regional News, Letters, Aug. 27, 2015

I am writing about the difficult situation of health care in the United States. 

As Medicare turned 50 years old on July 30, 2015, it remains a model for providing universal health care for all U.S. citizens. It has low administrative costs, about 4%. 

It provides free choice of providers. And it has high satisfaction rates among those enrolled.

There is enough extra money in the current investor-owned and dividend-driven private health insurance system to provide Medicare for all with no extra cost. Two common misconceptions are worth correcting. 

Medicare is not socialized medicine. The collection and payment of monies is publicly directed, but the provision of health services is by private parties. This is the way it is in most economically advanced countries. 

Secondly, Wisconsin Gov. Walker’s recent public proposal to solve the health care crisis by providing “vouchers” for individuals to buy private health insurance is a failed idea. 

Nowhere has this idea worked. It is untested and unproved and dangerous. It would be like having individuals use vouchers to buy private police, fire, health department, or court system services. Politicians are obligated to answer: why would Enhanced Medicare for All, as in House Bill HR 676, not work for the U.S.?

Dr. William Reed resides in Lake Geneva.

http://www.lakegenevanews.net/

A health system in dire need of reform

By Robert S. Kiefner, M.D.
Concord (N.H.) Monitor, Aug. 23, 2015

Through some mutation of American exceptionalism, we have come to believe that by spending more per capita on health care than any other country on Earth, we must surely enjoy the best health on the planet. Not so, not by a long shot.

The Affordable Care Act notwithstanding, the number of uninsured and underinsured in this country is still too high, accounting for thousands of preventable deaths each year. Also, more than 60 percent of personal bankruptcies are tied to uncovered medical expenses.

The cost curve has not been broken. In the health care barnyard, there are way too many piglets and not enough teats. The health insurance companies, plump from the ACA, are increasing premiums, co-pays and deductibles. The insurance industry has been calling the shots for years.

In an effort to offset future challenges to their oligarchies, they are pairing off in a frenzy of corporate promiscuity. Aetna is buying Humana, and Anthem is shelling out your premium dollars for Cigna. One can only hope that the Justice Department will pay close attention.

History has shown us that mergers, including insurance companies and hospital systems, have an annoying tendency toward increasing costs while decreasing access and patient choice. Physicians and their patients, pawns on the chessboard, may be forced to terminate longstanding relationships as mergers arbitrarily create new networks and dismantle others.

The for-profit insurance model is just plain wrong. Physicians and patients are too often befuddled and belittled by insurance companies in their pursuit of coverage for reasonable medical care. Even the smartest and most savvy among us have been beaten into submission by circuitous phone trees whose purpose is clear – abandon the effort to challenge the insurer or submit to exasperating appeals processes while your account goes to collections and your credit drops like a stone.

Big Pharma clearly has its sights on profit, not patients. It is one thing to spend billions of dollars for research on novel, lifesaving drugs. It is quite another to acquire rights to manufacture all forms of established generic drugs (such as colchicine for gout and doxycycline for infections), and to increase the cost tenfold overnight. New cancer drugs and new drugs for hepatitis C would seem to offer a breath of hope for cancer patients and those facing the uncertain prognosis of hepatitis C, until that breath is taken away by price tags in excess of $100,000 per year. Drug companies engage in this sort of behavior, well, because they can. Your money or your life indeed.

Pharmaceutical giants spend untold billions on direct-to-consumer advertising, imploring us to hound our doctors to prescribe some overpriced, marginally effective drug. Meanwhile, in the ultimate corporate welfare program, the government still cannot negotiate with drugs companies for reduced drug costs within Medicare Part D.

The health care free-for-all has led many physicians to misplace their copies of the Hippocratic Oath, which they so earnestly recited upon graduation from medical school. The changing economic landscape, combined with loss of autonomy, has too often led physicians to advocate on behalf of their corporate overlords instead of their patients.

How about a wag of the finger at our tort system?

Practicing physicians are haunted by the specter of a career-ending malpractice suit, ordering billions of dollars worth of unnecessary tests each year. In the world of “defensive medicine,” tests tend to beget more tests, adding to expense and the real potential for harm. Moreover, our tort system is an inefficient way of compensating patients who are harmed by the health care system.

Other players feeding at the health care trough include the vendors of electronic medical records. While a basic EMR can be of immense value to a clinician as a repository for information, the maintenance of an EMR requires substantial ongoing investments of time, money and personnel. EMRs have their origins as billing tools, and are too often crammed with details that do not pertain to care of the patient. Despite their high costs, different EMRs often cannot “talk” to each other, such that transmission of data is still at the mercy of a fickle fax machine and harried staff. To ensure that profits keep rolling in, the spending cycle for EMRs is just a few years, keeping providers and patients paying through the nose in the world of planned obsolescence of hardware and software.

Health care delivery has become, by intent, so complex that it has spawned a whole new cohort of health care policy experts and high level administrators, who project themselves as the only ones who can interpret the chaos, which they have conveniently created. This group includes architects of the ACA and an army of congressional lobbyists.

A friend of mine who works for the government within the Beltway reminds me that our nation is not held hostage by big government so much as big business, which runs big government for its benefit. Nowhere is this observation more salient than in the world of for-profit health care.

For real reform to occur, much advance work needs to be done.

First, we need to decide whether health care is a right or a privilege. If we choose the latter, forget about reform and continue with a profit-driven death spiral until we spend ourselves into oblivion. Should we embrace the notion that health care is a right for all Americans, the road to reform must first pass through campaign finance reform, repeal of Citizens United and dramatic reduction in congressional lobbyists. Our elected representatives need to work for us, not their biggest contributors.

We can build a not-for-profit system of health care that is publicly financed but privately delivered. Medicare should be improved, and applied to all (as in H.R. 676 currently before Congress). Overhead among the insurers is 20 to 30 percent, while Medicare overhead runs just 2 percent. No big-time advertising, shareholder profits, exorbitant CEO salaries. Just innovative, cost-effective, evidence-based, personal care.

We need to realign the health provider workforce to emphasize robust primary care, wherein primary care providers and their designated teams take care of their patients to the full limits of their training and expertise.

No mode of health delivery is perfect, but other countries are taking care of their citizens with better outcomes, improved patient satisfaction and lower costs with single-payer systems. Where there is a nonpartisan political will, there will be a way.

Robert S. Kiefner is a family physician and lives in Concord.

http://www.concordmonitor.com/home/18233047-95/my-turn-a-health-system-in-dire-need-of-reform

‘Value-based’ payment a threat to Hawaii health care

By Stephen B. Kemble, M.D. 
Honolulu Star-Advertiser, Sept. 6, 2015 

The architects of the federal Affordable Care Act (ACA) blamed high U.S. health costs on excessive and unnecessary care. 

We are told, “fee-for-service drives volume” and new payment models will pay for “value, not volume.” 

This rationale is flat-out false in Hawaii. 

Thanks to our Prepaid Health Care Act, we had the most cost-effective health care system in the country, with broad risk pooling, comprehensive benefits, no deductibles and low co-pays, and relying largely on small independent physician practices paid with fee-for-service. 

Prior to the ACA, we had the best benefits, the lowest per-capita Medicare spending, and among the lowest health insurance premiums in the country. 

Believing it to be the root of the problem, the Centers for Medicare and Medicaid Services (CMS) is pushing to replace fee-for-service with “value-based payment.” Doctors and hospitals are to be paid “up-front,” with bundled payment for an episode of care or prepaid care for an insured population. 

Unlike with fee-for- service, the incentive under “up front” payment is to minimize “volume” of services. 

To counter the perverse incentive to minimize necessary care, the ACA demands that physicians computerize and provide detailed documentation to measure and reward “quality.” 

“Value-based payment” also creates a perverse incentive to avoid poorer, sicker, more complex patients whose care would likely cost more and might bring down quality metrics. 

The ACA provides for risk adjustment, transferring money from plans with healthier to those with sicker populations, but this, too, requires detailed data from doctors on diagnosis and severity of illness. 

Risk adjustment formulas are complex and easily gamed, and we are already seeing extensive “up-coding” of diagnoses by doctors, hospitals and health plans to maximize payment. 

Hawaii has a shortage of doctors generally, especially for primary care. Our physician workforce is older, and we are losing around 100 physicians a year to retirement and out-of-state moves. Loss of physicians is accelerated by demands for computerization to provide detailed data to CMS and health plans for “quality” metrics and risk adjustment. 

On Oct. 1, the U.S. will switch to a much more complex diagnostic coding system, ICD-10. Unique among countries using this system, CMS wants physicians to use the full detail in the codes, backed by documentation in their notes, in order to be paid. This will require doctors to spend almost as much time documentation in their notes, in order to be paid. This will require doctors to spend almost as much time documenting as seeing patients. 

Doctors must choose between cutting their patient load and income, or staying at work hours longer to complete the required documentation. Hawaii physicians close to retirement will likely retire, worsening our physician shortages. 

“Value-based payment” ignores the fact that the most cost-effective health care systems pay doctors with simpler versions of fee-for-service, including other countries and Hawaii’s experience with our Prepaid Health Care Act. It ignores the huge difficulties in developing valid, meaningful quality measures due to the complexity of health care, and the administrative burdens and costs these reforms impose on doctors, hospitals and health plans. 

Americans see doctors less and have fewer hospital days per capita than any other industrialized country, and Hawaii has low utilization within the U.S. The ACA is adding more administrative burdens, trying to further squeeze already low utilization. The major driver of excessive cost in U.S. health care is exorbitant administrative cost, not unnecessary care, and we are making this worse. 

Preparations for “value-based payment” in Hawaii so far are associated with escalating administrative burdens, accelerating loss of doctors, increasing refusal to accept Medicaid and Medicare, avoidance of sicker, more complex patients, increasing ER and hospital use, and rapidly rising health insurance premiums. Where is the “value”? 

Let’s abandon “value based” payment that isn’t, and refocus on reducing administrative burdens and salvaging our physician workforce. 

Stephen B. Kemble, M.D., is past president of the Hawaii Medical Association, a Hawaii Health Authority member and an assistant clinical professor medicine at the John A. Burns School of Medicine. 

http://www.staradvertiser.com/editorialspremium/20150906_value-based_payment_a_threat_to_hawaii_health_care.html?id=324917261

Medicare’s pay-for-performance incentives unfairly penalizing safety-net hospitals: Annals of Internal Medicine editorial

Using unproven, ‘value-based’ penalties and bonuses, and ignoring socioeconomic disparities between patient populations, Medicare is diverting money from hospitals serving largely minority and low-income Americans to hospitals serving the more affluent

FOR IMMEDIATE RELEASE
Sept. 7, 2015

Contact:
Mark Almberg, PNHP communications director, 312-782-6006, mark@pnhp.org

Medicare’s pay-for-performance incentives, which financially reward or punish hospitals depending on whether they hit specific numerical targets in matters such as curbing inpatient readmissions, are having the unintended side effect of taking dollars away from the nation’s historically cash-strapped safety-net hospitals and boosting the revenue of wealthier hospitals that serve an economically better-off patient base.

That’s one of the conclusions of an evidence-based editorial in today’s [Tuesday, Sept. 8] Annals of Internal Medicine.

The article, titled “Collateral Damage: Pay-for-Performance Initiatives and Safety-Net Hospitals,” is written by two leading health-system researchers, Drs. Steffie Woolhandler and David U. Himmelstein, professors at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School.

“Medicare’s P4P [pay-for-performance] program, which does not adjust for patients’ socioeconomic status, assumes that bonuses and penalties will prod substandard providers to improve or see their patients migrate to higher-quality options,” Woolhandler and Himmelstein write. “However, when quality problems are due to a hospital’s financial distress and patients cannot go elsewhere, penalizing low scorers may well punish patients and exacerbate quality disparities. Prescribing a starvation diet for safety-net hospitals that are strapped for cash and are quality challenged makes no sense unless the goal is to close them.”

The Woolhandler-Himmelstein commentary appears alongside a study led by Matlin Gilman at Rollins School of Public Health at Emory University in Atlanta of more than 3,000 acute care hospitals in 2014. That study examines the financial impact of Medicare’s Value-based Purchasing program and Hospital Readmissions Reduction Program, two P4P initiatives inspired by the Affordable Care Act, and finds that, in fact, safety-net hospitals are suffering disproportionate penalties from the programs.

Woolhandler and Himmelstein say that the Gilman study’s findings were “not unexpected,” given the findings of related research. They also note, in view of the researchers’ methods, the study very likely understates the extent of the disparity in penalties.

The evidence for the efficacy of P4P measures in medicine is “surprisingly slim,” they write, and such programs can actually backfire by demoralizing physicians and crowding out the intrinsic motivation they have to do good work, for example.

The authors note that P4P schemes are easily “gamed” by hospital administrators who engage in such practices as encouraging physicians to upcode (that is, exaggerate) diagnoses to make the hospital’s medical outcomes look better, or to place early returning Medicare patients in extended “observation stays” (which Medicare doesn’t count as readmissions) rather than readmitting them as inpatients.

Even when it comes to gaming, the authors write, non-safety-net hospitals have a technological and economic advantage over safety-net hospitals – again, to the latter’s detriment.

Woolhandler and Himmelstein warn that Medicare’s P4P measures – particularly when combined with another provision of the ACA that mandates cuts to special federal payments (Disproportionate Share Hospital funds) to safety-net hospitals – will exacerbate existing inequalities and pose a threat to many large urban hospitals that have been mainstays of care for millions of people in low-income and minority communities.

“Paying for quality has strong intuitive appeal,” the authors write. “However, as with other medical interventions, intuition may mislead, and adopting everywhere policies that have been proven nowhere puts millions at risk for unintended consequences.”

In addition to their academic posts, Himmelstein and Woolhandler are primary care doctors in New York City. They are also co-founders of Physicians for a National Health Program (PNHP), an organization of 19,000 doctors who advocate for a single-payer national health insurance program. PNHP played no role in funding or otherwise supporting their article.

In a comment today, Woolhandler, who has worked as a primary care physician in safety-net hospitals for decades, said, “We need a single-payer system that treats all patients, and all hospitals, equitably.”

Dr. Claudia Fegan, who is the Chicago-based national coordinator of PNHP and who also works in a safety-net hospital, added: “We take care of patients that no one else is prepared to take care of. As a result, we are victimized by the adverse selection created by a society that has yet to fully accept its obligation to take care of everyone.”

******

“Collateral Damage: Pay-for-Performance Initiatives and Safety-Net Hospitals.” Steffie Woolhandler, M.D., M.P.H., and David U. Himmelstein, M.D. Annals of Internal Medicine, online ahead of print, Sept. 8, 2015.

A copy of the article (in the form of an author’s proof) is available to media professionals here or upon request from Mark Almberg, mark@pnhp.org.

A copy of the related Gilman article is available upon request from Angela Collom at Annals of Internal Medicine. She may be reached at acollom@acponline.org. “The financial effect of value-based purchasing and the Hospital Readmissions Reduction Program on safety-net hospitals in 2014. A cohort study.” Gilman M, Hockenberry JM, Adams EK, Milstein AS, Wilson IB, Becker ER. Annals of Internal Medicine, online ahead of print, Sept. 8, 2015.

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization of more than 19,000 doctors who support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.